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BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
Nuno Guerra Lopes
Project submitted as partial requirement for the conferral of
Master in Management
Supervisor:
Ph.D. Professor Ana Cristina Simões, Invited Professor, ISCTE Business School, Marketing,
Operations e General Management Department
Co-supervisor:
Mário Freire, CEO at Enkrott, S. A.
June 2016
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BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
i
Acknowledgements
No decorrer deste longo trabalho, algumas pessoas desempenharam um papel demasiado
importante para o sucesso desta Tese de Mestrado. Uns pelo apoio a nível técnico e
profissional, outros a nível emocional deram-me o apoio necessário para que desenvolvesse
este trabalho.
Em primeiro lugar, gostaria de agradecer ao Daniel Carapau e à Liliana Mâncio-Silva por me
deixarem fazer parte da equipa deles durante o COHiTEC, e por me receberem de braços
abertos, dando-me o apoio necessário para escolher este tema.
À minha orientadora Professora Cristina Simões e ao meu Co-orientador Eng. Mário Freire,
por me porem ao dispor todas as ferramentas necessárias para desenvolver este trabalho, bem
como me prestarem apoio durante todo este percurso.
À minha irmã Inês, à minha avó Bia e à minha tia Mena, por terem sido uma importante fonte
de apoio durante estes meses de tese, bem como durante a minha restante formação
académica.
Aos meus Pais, por nunca me fecharem as portas e me deixarem escolher o meu caminho, por
me apoiarem em fases menos boas e por sempre estarem presentes nestes 6 anos de estudos
longe de casa.
À ForTuna – Tuna Académica da Nova SBE – por ter sido uma família que me recebeu de
braços abertos, por ser um escape importante para arejar as ideias, por me ter feito crescer
como pessoa e por me ter dado a oportunidade de desempenhar algumas funções que nunca
pensei desempenhar.
Aos meus Maiores da Aldeia, por partilharem esta longa jornada comigo, já desde os tempos
do Secundário. Ao Zé Ma, Diogo, Débora, Miguel e Daniela, Vera, Marta, Mário, Bernardo,
Zézinho, Patrícia, Oliveira, Sara e Prazeres, porque sempre me apoiaram e por serem os
melhores amigos que alguém pode desejar.
À Joana, por ter sido um importante apoio tanto durante a elaboração da minha tese, bem
como durante o restante período de mestrado.
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
ii
Abstract
Malaria is an infectious disease that have caused huge losses to the human being,
mainly for those who live in malaria endemic regions. In one hand, public entities spend
millions in methods to avoid the transmission, in the treatment of infected people or in the
eradication of the disease. In the other hand, half of the human population is at risk and there
is half million deaths yearly, being considered one of the most dangerous diseases.
Additionally to those who live in endemic regions, millions of travellers visit endemic
regions yearly, causing an increase of the problem. As follows, the awareness around this
infectious disease has been increasing, mainly due to the increase of the tourism around the
world.
The incorrect use of the existing medicines has induced to increasing the parasite
resistance, reducing the efficiency of those medicines. In this way, it is imperative the
development and launching of new medicines that could solve this problem.
This problem was detected and both pharmaceutical companies and other entities are
increasing their efforts in research and development, in order to find new antimalarial
medicines that may decrease the malaria burden. However, the investment needed to the
development of new medicines is excessively high, which means that not all the companies
and entities are capable of performing those activities.
Considering what was said above, the main objective of this Business Plan is to
analyse the economic and financial viability of the development of a new antimalarial
medicine.
Keywords: Biotechnology, Pharmaceutical Industry, New Product Development and Malaria
JEL Classification: L65, M13
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
iii
Resumo
A malária é uma doença infeciosa que nos últimos anos tem causado enormes
prejuízos para o ser humano, principalmente para aqueles que vivem nas regiões endémicas.
Por um lado, todos os anos as entidades governamentais gastam milhões de euros em meios
para evitar o contágio, no tratamento dos pacientes ou na erradicação da doença. Por outro,
esta doença é das mais mortíferas no mundo, estando cerca de metade da população em risco
de contágio, havendo centenas de milhar de mortes por ano.
Para além das pessoas que vivem diretamente em contacto com a malária, milhões de
viajantes visitam aquelas zonas anualmente, aumentando ainda mais o problema. Desta forma,
a preocupação em torno desta doença tem vindo a aumentar, um pouco devido ao aumento
dos fluxos de turismo mundial.
Devido ao uso indevido dos medicamentos existentes, o parasita da malária tem vindo
a ganhar resistência aos mesos, sendo estes medicamentos menos eficazes. Desta forma,
torna-se urgente o desenvolvimento de novos medicamentos que possam fazer face a este
cenário.
Ao perceber este problema, tanto empresas farmacêuticas como outras entidades têm
vindo a multiplicar esforços para que, através de investigação e desenvolvimento, apareçam
novos medicamentos que atenuem as perdas provocadas pela malária. No entanto, o
investimento necessário para desenvolver novos medicamentos é demasiado elevado e nem
todas as entidades têm a capacidade para o fazer.
Posto isto, o principal objetivo deste Plano de Negócios é o estudo da viabilidade
económica e financeira do desenvolvimento de um novo medicamento que possa combater a
malária.
Palavras-Chave: Biotecnologia, Industria farmacêutica, Desenvolvimento de novos produtos
e Malária
Classificação JEL: L65, M13
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
iv
Index
Acknowledgements ..................................................................................................................... i
Abstract ...................................................................................................................................... ii
Resumo ...................................................................................................................................... iii
Sumário Executivo ..................................................................................................................... x
1. Introduction ......................................................................................................................... 1
1.1. Objectives of the Plan .................................................................................................. 2
1.2. Presentation of the Project and Researchers ................................................................ 3
2. Literature Review ................................................................................................................ 4
2.1. Malaria ......................................................................................................................... 4
2.2. Pharmaceutical Industry .............................................................................................. 5
2.3. New Product Development .......................................................................................... 7
2.4. New Product Launching ............................................................................................ 11
2.5. Business Planning and Strategy ................................................................................. 12
2.5.1. External Analysis ................................................................................................... 13
2.5.2. Internal Analysis .................................................................................................... 15
2.5.3. Competitive Analysis ............................................................................................. 17
2.5.4. SWOT and TOWS Matrix ..................................................................................... 20
3. Methodology ..................................................................................................................... 22
3.1. Research Question ..................................................................................................... 22
3.2. Objectives .................................................................................................................. 23
3.3. Methodology .............................................................................................................. 24
3.4. Methods ..................................................................................................................... 24
4. Presentation of the new business ...................................................................................... 25
4.1. Business Opportunity ................................................................................................ 25
4.2. Technology ................................................................................................................ 26
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
v
4.3. Product or Service ..................................................................................................... 27
5. External Analysis .............................................................................................................. 28
5.1. PESTEL ..................................................................................................................... 28
5.1.1. Political Forces ....................................................................................................... 28
5.1.2. Economic Forces .................................................................................................... 29
5.1.3. Social Forces .......................................................................................................... 30
5.1.4. Technological Forces ............................................................................................. 31
5.1.5. Environmental Forces ............................................................................................ 31
5.1.6. Legal Forces ........................................................................................................... 31
5.2. Industry Map.............................................................................................................. 33
5.3. Industry Life Cycle .................................................................................................... 34
5.4. Opportunities and Threats ......................................................................................... 35
6. Internal Analysis ............................................................................................................... 36
6.1. Organization’s Structure ............................................................................................ 36
6.2. Porter’s Value Chain ................................................................................................. 39
6.3. McKinsey’s 7S Framework ....................................................................................... 40
6.4. Strengths and Weaknesses ......................................................................................... 41
7. Competitive Analysis ........................................................................................................ 42
7.1. Porter’s 5 Forces ........................................................................................................ 42
7.2. Ansoff’s Matrix ......................................................................................................... 44
7.3. TOWS Analysis ......................................................................................................... 45
7.4. VRIO Framework ...................................................................................................... 47
8. Development Strategy ....................................................................................................... 48
8.1. Vision, Mission and Corporate Values ...................................................................... 48
8.2. Critical Success Factors ............................................................................................. 49
8.3. Value Proposition ...................................................................................................... 49
8.4. SMART Objectives ................................................................................................... 50
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
vi
8.5. Resources, Capabilities and Strategic Competencies ................................................ 50
8.6. Competitive Strategy ................................................................................................. 51
8.7. Growth Strategy ......................................................................................................... 51
8.8. Business Model.......................................................................................................... 52
9. Marketing .......................................................................................................................... 53
9.1. AMS Marketing Plan ................................................................................................. 53
9.2. Marketing plan to commercialization ........................................................................ 54
10. Implementation of the Plan ........................................................................................... 55
10.1. Time-to-market ...................................................................................................... 55
10.2. Material Needed ..................................................................................................... 55
10.3. Equipment Needed ................................................................................................. 56
10.4. Implementation Requisites ..................................................................................... 56
11. Financial Forecasts ........................................................................................................ 58
11.1. Assumptions ........................................................................................................... 58
11.2. Financial Forecasts for AntiMalarial Solutions ..................................................... 59
11.3. Financial Forecasts for the commercialization ...................................................... 65
12. Risks of the project ........................................................................................................ 74
13. Conclusion ..................................................................................................................... 75
References ................................................................................................................................ 76
Appendix .................................................................................................................................. 80
Appendix I – Internal, External and Competitive Analysis ................................................. 80
Appendix 2 – Sales Forecast and Financial Planning - AMS .............................................. 83
Appendix 3 – Sales Forecast and Financial Planning – Commercialization ........................ 86
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
vii
Figures Index
Figure 1 - Cooper's NPD Stage Gate Process ............................................................................ 9
Figure 2 - Industry (Product) Life Cycle .................................................................................. 15
Figure 3 - Porter's Value Chain ................................................................................................ 16
Figure 4 - Porter's 5 Forces ...................................................................................................... 18
Figure 5 - Ansoff's Matrix ........................................................................................................ 19
Figure 6 - TOWS Analysis ....................................................................................................... 21
Figure 7 - Distribution of Malaria around the world ................................................................ 25
Figure 8 - Pharmaceutical Industry Map .................................................................................. 33
Figure 9 - AMS Organizational Structure ................................................................................ 36
Figure 10 - Organizational Structure of Commercialization .................................................... 39
Figure 11 - Break-Even Point, Commercialization .................................................................. 71
Tables Index
Table 1 - Ansoff's Matrix ......................................................................................................... 45
Table 2 - Porter's Generic Strategies ........................................................................................ 48
Table 3 - Project's Flowchart .................................................................................................... 55
Table 4 - COGS and Supplies and Service Expenses, AMS .................................................... 59
Table 5 - Net Working Capital, AMS ...................................................................................... 60
Table 6 - Cash Flow Statement, AMS ...................................................................................... 60
Table 7 - Project´s Evaluation, AMS ....................................................................................... 61
Table 8 - Income Statement, AMS ........................................................................................... 61
Table 9 - Financial Plan, AMS ................................................................................................. 62
Table 10 - Balance Sheet, AMS ............................................................................................... 63
Table 11 - Economic Ratios, AMS .......................................................................................... 64
Table 12 - Financial Ratios ...................................................................................................... 64
Table 13 - Liquidity Ratio, AMS ............................................................................................. 64
Table 14 - COGS and Supplies and Service Expenses, Commercialization ............................ 65
Table 15 - Total Revenues, Commercialization ....................................................................... 66
Table 16 - Net Working Capital, Commercialization .............................................................. 67
Table 17 - Cash Flow Statement, Commercialization .............................................................. 67
Table 18 - Income Statement, Commercialization ................................................................... 68
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
viii
Table 19 - Financial Plan, Commercialization ......................................................................... 69
Tabel 20 - Balance Sheet, Commercialization ......................................................................... 70
Table 21 - Sensitivity Analysis for Quantity Sold, Commercialization ................................... 72
Tabel 22 - Sensitivity Analysis for Unit Margin, Commercialization ..................................... 72
Tabel 23 - Sentitivity Analysis for Quantity Sold and Unit Margin, Commercialization ....... 73
Table 24 - Economic Indicators, Commercialization ............................................................... 73
Table 25 - Financial Indicators ................................................................................................. 73
Table 26 - SWOT Analysis ...................................................................................................... 80
Table 27 - Porter's 5 Forces ...................................................................................................... 81
Tabel 28 - TOWS Analysis ...................................................................................................... 82
Tabel 29 - Project's Assumptions ............................................................................................. 83
Table 30 - Personnel Costs, AMS ............................................................................................ 84
Table 31 - Investments, AMS .................................................................................................. 85
Table 32 - Government and Other Public Entities, AMS ........................................................ 85
Tabel 33 - Travellers for malaria endemic regions .................................................................. 86
Table 34 - Depreciations and Amortizations, AMS ................................................................. 86
Table 35 - Quantity sold per country ....................................................................................... 87
Table 36 - Marker entry per year ............................................................................................. 87
Table 37 - Manufacturing Cost of Prophyl-ACT ..................................................................... 87
Table 38 - Price of Prophyl-ACT ............................................................................................. 87
Table 39 - Market penetration rate ........................................................................................... 87
Tabel 40 - Personnel costs, Commercialization ....................................................................... 87
Tabel 41 - Government and other public entities, Commercialization .................................... 87
Table 42 - Investment, Commercialization .............................................................................. 87
Tabel 43 - Depreciations of fixed assets, Commercialization .................................................. 87
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
ix
Abbreviations List
AMS – AntiMalarial Solutions
BEP – Break-Even Point
CEO – Chief Executive Office
CIO – Chief Innovation Office
EMA – European Medicines Agency
EU – European Union
FDA – Food and Drug Association
IMF – International Monetary Fund
IRR – Internal Rate of Return
IRS – Indoor Residual Spray
ITNs – Insecticide-Treated Nets
LLIN – Long-Lasting Insecticidal Nets
M&A – Mergers and Acquisitions
NGO – Non-Governmental Organization
NPD – New Product Development
NPV – Net Present Value
NWC – Net Working Capital
ROA – Return on Assets
ROE – Return on Equity
ROI – Return on Investment
R&D – Research and Development
SCM – Supply Chain Management
SME – Small and Medium Enterprises
TTIP – Transatlantic Trade and Investment Partnership
UNWTO – United Nations World Trade Organization
USA – United States of America
VAT – Value Added Tax
WACC – Weighted Average Cost of Capital
WHO – World Health Organization
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
x
Sumário Executivo
O presente Plano de Negócios da AntiMalarial Solutions surge da participação de uma
equipa no acelerador de comercialização de tecnologia COHITEC, tendo como finalidade a
constituição da empresa com o mesmo nome.
Este projeto tem por base o grande problema que a malária representa atualmente,
tanto em países em desenvolvimento, como em países desenvolvidos. Se por um lado, nos
primeiros são as populações mais pobres aquelas que sofrem mais com a malária, nos países
desenvolvidos também há uma crescente preocupação com este problema. Assim sendo, com
o crescimento do turismo mundial, os turistas que viajam para regiões endémicas da malária
procuram mais e melhores alternativas que ajudem a prevenir a infeção. Desta forma, existe
espaço para que novas tecnologias apareçam, a fim de obter medicamentos mais eficazes e
que tenham efeitos secundários menos adversos.
Após uma rigorosa análise da envolvente externa, pode-se concluir que a dimensão
deste mercado é bastante vasta, havendo espaço para várias empresas ocuparem o seu espaço.
Além disso, e focando na malária, este é um mercado que tem vindo a crescer
consistentemente nos últimos anos, devido ao crescimento do turismo a nível mundial.
Considerando a análise da competitividade da indústria, pode dizer-se que existe
alguma concorrência, embora seja relativamente baixa. Assim sendo, os fatores que mais
contribuem para a baixa competitividade são a elevada regulamentação e a necessidade de
fazer elevados investimentos no processo de investigação e desenvolvimento. Além disso, é
comum que os novos medicamentos sejam protegidos por patentes que impedem que outras
empresas imitem e comercializem estes medicamentos. Estes três fatores referidos criam
elevadas barreiras à entrada de novos players para a indústria.
Tendo em conta o que foi apresentado anteriormente, a indústria para a qual este Plano
de Negócios é desenvolvido revela-se bastante atrativa. No entanto, serão necessárias algumas
decisões estratégicas que permitam o desenvolvimento do Prophyl-ACT, fazendo-o chegar ao
mercado da maneira mais eficiente. Assim sendo, devido ao elevado investimento necessário,
a empresa terá que recorrer a financiadores externos, a fim de conseguir o montante
necessário para prosseguir com os procedimentos exigidos. Além disso, mesmo com fontes
externas de financiamento, torna-se impossível para a empresa prosseguir com as fases mais
avançadas de ensaios clínicos bem como com a comercialização. Dito isto, a única alternativa
plausível a seguir será o licenciamento da tecnologia a outra empresa farmacêutica logo após
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
xi
a primeira fase de ensaios clínicos, sendo que a empresa terá que abrir mão das fases
posteriores.
A estrutura organizacional da AMS será apenas focada nas suas atividades essenciais e
naquelas que lhe conferem uma vantagem competitiva sustentável. Neste sentido, a
AntiMalarial Solutions apenas terá um departamento de investigação e desenvolvimento, cuja
função será todo o processo de desenvolvimento do Prophyl-ACT, desde o fim da prova de
conceito até ao fim da primeira fase de ensaios clínicos. Adicionalmente, a empresa terá ainda
atividades complementares que ficarão a cargo do Diretor Executivo e do Gestor de
Marketing. Relativamente a este último, o seu papel será fulcral para a estabilidade financeira
da empresa pois é o responsável pela comunicação relativa ao processo de venda da patente.
A estratégia seguida pela empresa terá por base o conhecimento dos membros da
equipa de investigação acerca da malária. Neste sentido, a empresa irá adotar uma estratégia
competitiva de focalização no início do processo de investigação apresentado.
Consequentemente, a estratégia de crescimento da AMS fica inicialmente restringida à
malária, podendo ser alargado a longo-prazo a outras doenças relativamente parecidas com
esta, como são casos o Tripanossoma e a Leishmaniose.
No que diz respeito ao financiamento, será necessário angariar €1.000.000 a fim de
poder começar a prova de conceito ainda em 2016. Este montante corresponderá apenas a
capital próprio pois a atividade desta empresa tem nos primeiros anos uma grande
necessidade de capital, o que obrigará a sucessivos aumentos de capital.
O estudo de viabilidade económica e financeira vem confirmar que o projeto em
análise gera capitais suficientes para que seja considerado um bom investimento. Esta
conclusão é confirmada pelo Valor Atual Líquido de €490.267, uma Taxa Interna de
Rentabilidade de 16.43% e um Payback Period de 3 anos, 10 meses e 17 dias.
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
1
1. Introduction
This business plan aims to identify the economic and financial viability of the
commercialization of a new prophylactic drug based in an innovative technology. However,
since AntiMalarial Solutions will operate in the pharmaceutical industry, the technology will
be out-licensed at some point in this project, it shall be calculated the potential of
commercialization.
The first chapter is the literature review and it contains a theoretical framework that
clarifies the reader about the main topics that may affect the success of this business plan. In
this way, it includes sections about malaria, pharmaceutical industry, new product
development, new product launch, and a brief review about the business models and tools
used along this document.
Following this, the methodology includes the research question, the objectives to
achieve with this work, the methodology and the methods used during this exercise.
After the methodology, the author presents the project by explaining the business
opportunity, it introduces the technology developed, and it explains the product developed.
Following this, the author performs an external analysis, in which he elucidates the
reader about the external forces, the opportunities and threats, the industry life cycle and map.
Concerning the internal analysis, it is presented the organization’s structure as well a
deep analysis to it, and the explanation of the strengths and weaknesses of AMS.
The competitive analysis consists on the identification of those that may affect the
profits of the company. Moreover, the author identify the strategy that the company shall
choose and base this strategy on the sustained competitive advantage.
Following the information collected, it will be presented a development strategy,
which includes the definition of vision, mission and corporate values, as well the objectives
and critical success factor. Thus, it will be disclosed the value proposition, competitive and
growth strategies and the business model.
In order to communicate the value proposition to the target, the author will elaborate a
marketing plan to present to the potential buyers of the patent, as well as a marketing plan to
deliver the product in the market, so it will be easier to allocate costs in the financials.
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
2
Considering what was said above, there is enough information to explain the
implementation of the plan. Hence, it will be presented the time-to-market, the materials and
equipment needed and the implementation requisites.
Since the main objective is to understand the financial viability of AMS, the financial
forecasts assume particular relevance. Therefore, it is important to explain the assumptions
used to perform those forecasts. Afterwards, the author presents the forecasts of AMS until
the moment of licensing the patent to other company. However, the exercise shall continue
until the beginning of the sales period given that AMS needs this information during the
negotiation rounds.
Finally, since this is an exercise that involves uncertainty, due to the unpredictability
of some aspects, the author identifies the main risks of this project and subsequent solution
that may, at least, mitigate the impact of this risks.
1.1. Objectives of the Plan
Being this master thesis a business plan, the main objective of this exercise is to
evaluate the economic and financial viability of this project, considering that the company
will out-license the product at some point.
The idea behind the performance of a business plan is that this document represents a
useful tool in the presentation of projects to other entities. In this way, when an entrepreneur
develops its business, it will write a business plan to present it to potential financial
institutions or investors that could invest on his project. Following this, the analysis made
must be aligned with the real world, in order to raise credibility for the project in those
entities. Along these lines, the author of a business plan shall provide realistic Internal,
External and Competitive Analysis in order to provide reliable information to stakeholders.
After collecting all the relevant information, the business plan will comprise the
adequate strategy to adopt to face the challenges of the macro and micro environments, as
well as to enjoy and take advantage of the existing opportunities.
Considering that the main objective of this business plan is related with the
commercialization of the product, it means that there will be a Marketing section, where the
communication strategy will be explained.
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
3
Finally, it is important to provide information about the requirements to implement the
plan, the results of the plan if well implemented in the Financial Forecasts, and the Risks
behind the execution of this project.
1.2. Presentation of the Project and Researchers
The project of AntiMalarial Solutions is the result of the participation of two
researchers and a management student in a program promoted by COTEC Portugal. This
program, COHITEC, which happened between March and July of 2015, in INDEG-IUL,
allows the researchers to bring their technologies to the market, by providing knowledge and
support in the implementation and commercialization of the technologies developed by the
researchers. Additionally, this program ease the access of the entrepreneurs to several
financial sources and give an important support in the business development phase.
The researchers that developed the technology behind the AMS Project are Liliana
Mâncio-Silva and Daniel Carapau, both members of Instituto de Medicina Molecular. They
applied to COHITEC were accepted to participate in this program, and had the help of Nuno
Lopes, a master student of management in ISCTE Business School, during the program.
This technology was mainly developed by Liliana Mâncio-Silva in the past years. She
is a very experienced researcher in malaria with more than ten years of experience of work in
this disease. Liliana is a Post-Doc researcher in Instituto de Medicina Molecular and she has
PhD in the Pasteur Institute in Paris.
Regarding Daniel Carapau, he joint Liliana when she started to work in the Instituto de
Medicina Molecular, as a Post-Doc. Additionally, Daniel has a PhD in the New York
University.
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
4
2. Literature Review
The literature review explains and localizes the readers in the topics approached in the
business plan. Therefore, it is important to talk in this section about the pharmaceutical
industry, the process of developing new medicines or, in other words, new product
development in this industry, malaria, which is the disease targeted by the technology and,
regarding this is a business plan, a brief explanation of the tools used in this plan.
2.1. Malaria
Malaria is a parasite disease caused by Plasmodium parasites. These parasites are
transmitted to human beings through the bite of an infected Anopheles mosquito.
This tropical disease is a real threat to human beings given that can lead to dead when
not treated on time. According to World Health Organization (WHO, 2016), 3.2 billion
people are at risk of infection in 2015, and the disease caused, regarding the organization’s
estimates, 438 thousand deaths in 2015.
The best way to avoid any problem related with malaria is to prevent the bite of the
mosquitos, even with the wide ranges of treatments of malaria. Concerning the prevention of
this infectious disease, World Health Organization recommends two different methods to all
people at risk of being infected. The first one is the use of Insecticide- Treated mosquito Nets
(ITNs) where the most reliable are the Long-Lasting Insecticidal Nets (LLINs). The other
practice important to prevent malaria is the use of Indoor Residual Spraying (IRS) with
residual insecticides in order to reduce the risk of transmission (WHO Factsheet 94). Both
methods are important in controlling the vector of transmission, the Anopheles mosquitos, but
are not usually used by people that travels to malaria endemic regions.
The main problem to the fight against malaria is the resistance of the parasite to
insecticides and antimalarial drugs (WHO Fact sheet number 94), being the prevention the
best way to treat the problem. In this way, the prophylaxis is one of the options to people, in
order to develop defences against the parasite. However, all the prophylactic medicines
currently available in the market have important limitations. These drugs are Quinine,
Chloroquine, Primaquine, Sulfadoxine/pyrimethamine, Mefloquine, Artemisinins and
Atovaquone/proguanil, also known as Malarone, and have some problems such as safety,
resistance, compliance or good manufacturing practice, unless the last one.
Atovaquone/proguanil has solved all the problems of the other drugs but its price is a big
limitation to people to buy it.
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
5
Given that Malaria represents a real threat for human beings and it is very difficult to
fight this disease, the awareness of the society has been increasing. One important step to put
this awareness in practice was the increasing number of institutions that fund research and
development of new innovative ideas, as the Bill and Melinda Gates Foundation, and the
increase of Non-Governmental Organizations (NGO) that develop efforts on preventing
malaria transmission, resulting in the decreasing tendency of the effects of this disease. In
2013, this organization estimated 3.3 billion people in risk, while in 2015 this number was 3.2
billion. Moreover, there were 627 thousand deaths in 2013 (WHO, 2013) related with Malaria
and 438 million in 2015. In the last few years, Malaria has become one of the most important
diseases in terms of funding to research development, being the second most important by
receiving €82.62 billion between 1997 and 2010 (Fitchett et al. 2013). According the WHO,
in 2012, the global funding for malaria was €2.5 billion, which corresponds to half of what
this organization considers enough per year (WHO, 2013).
The efforts performed to reduce the burden of malaria are having some effects. First of
all, between 2000 and 2015 the incidence rate of the disease decreased 37%, while the death
rate decreased 60%. In the case of the children, that are one of the riskier group, the death rate
felt down 65%, allowing to save 5.9 million children (WHO Factsheet 94).
Being said that, there is a need of developing and launching new medicines to fight
malaria. To better understand the problems behind the launching of a new prophylactic drug,
it is important to understand how the pharmaceutical industry works, what underlies the
development of new drugs and what is important to consider in the process of launching a
new medicine.
2.2. Pharmaceutical Industry
In order to perform a deeper and more validated business plan it is crucial to have a
detailed knowledge about the pharmaceutical industry and its dynamics and characteristics.
The business model that better characterizes this industry is the Blockbuster model, in
which the companies try to develop blockbusters to introduce in the market with the objective
of gaining high profits from the commercialization of these important drugs. However, the
costs of new drugs have been increasing across the years. For example, in the 90’s, the cost of
developing new drugs was 1.02 billion euros, increasing to 1.58 billion euros in the early
2000s and in 2008 that figure rose to 2.047 billion euros (O’Hagan & Farkas 2009).
Therefore, the companies cannot focus on all the therapeutics and diseases, because this
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model will not deliver sustainable growth. Instead, they shall be “focused on the most
promising areas of science and most attractive target consumers (Gilbert et al. 2003:74)”.
Moreover, this author argues that the pharmaceutical companies shall find strategic partners
for R&D, which will allow the companies “to manage risks and return, across both pipelines
and functions (Gilbert et al. 2003).
“The traditional pharmaceutical companies cover most of the value chain of drug
supply, starting from research over production to sales; the smaller and less capital-intensive
biotech firms tend to focus on research and development in a clearly defined area (Holland
2004, cited by Kirchhoff & Schiereck 2011:25)”. This idea explains the dynamics of the
pharmaceutical industry and, at the same time, how the increasing research and development
costs shifted it. In one hand, big companies have the control of the logistics and supply chains
of the industry, and their products cover a wide range of diseases and treatments, so they
cannot perform a sustainable R&D to all the health problems. In other hand, the rising of
venture capitalists and other types of funds helped the development of new and small
companies that are focused on a specific area or disease, improving the innovation
productivity. The main issue of this Small and Medium Enterprises (SMEs) is that they do not
have enough capital to invest in production and it scalability, as well as the supply chain
needed to commercialize the new medicines. Subsequently, the pharmaceutical start-ups are
obliged to license their drugs to other bigger players in order to get the invested capital back.
Other solution that has been common in this industry is the Mergers and Acquisitions
(M&A), where big companies buy and integrate in their structure the smaller one or, in the
case of companies with similar size, they merge, creating a structure that is a combination of
both companies. Although these operations allow companies to take advantage from
synergies, there are some authors that suggest that this option is not so good given the high
transaction costs. According to Pisano (1997), in cases where the transaction costs are too
high, other kinds of cooperation are preferable to the firms involved. For example, small
companies can license the drugs in order to avoid the expensive investments needed in the
commercialization, being an advantage to the bigger company because it avoids the risks
underlying the research and development phases.
The barrier to provide a new innovative drug to the market, regarding the costs, and
the increasing number of medicines that are losing their patent protection, has led to the
increasing presence of imitators in the industry. The main reasons to these phenomenon are
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price difference to original drugs, and incentives from governments to the use of these
cheaper alternatives. These firms produce drugs which patent expired, at a lower cost and
practicing lower prices than the innovators. The emergence of these drugs in the market
changed its dynamics by reducing the share of the companies that promote the innovation. “In
2011, Portugal, Greece and Spain reduced spending on prescription pharmaceuticals by 20%,
13% and 8% respectively (Valverde 2013: 52)”.
The emergence of these imitative companies in the industry has increased the
competitiveness between firms, mainly between innovators and imitators. It is usual that the
innovators make incremental changes in the drugs in order to have a longer period of patent
protection. As Garavaglia et al. (2012) and Valverde (2013) observe, the overall concentration
in the industry is low, but when observing a single therapeutic area, the concentration is very
high.
The new product development in this industry is also a very important topic related
with the present work. Therefore, it is important to enhance this process, the dynamics within
it and some limitations in the model of innovation, which will be performed in the next topic.
2.3. New Product Development
According (Tidd & Bessant 2009b), innovation is not only an instrument that benefits
the individual enterprise, but an activity that will favour the general society by being an
important source of national economic growth. This observation highlights the importance of
the constant innovation to both companies and societies. For one hand, companies that invest
in new product development (NPD) are more likely to launch products that meet the
customers’ needs and are more likely to answer to new challenges, gathering higher profits. In
the other hand, the stakeholders of these companies will enjoy higher benefits driven from the
new products.
The management of the companies are the most responsible to decide the
organizations model to innovate and deliver different and better products. Nonetheless, firms
shall meet the customers’ needs and wants when the new ideas are put in practice. As
Christensen (1997a) defends, the customers of a company are those who control what the
company can do. However, according this author, it is most common that incumbents of a
specific industry tend to take advantage through sustaining innovation, whereas new entrants
tend to take advantage by introducing disruptive innovative products (Christensen 2006). Yet,
it can happen the case of a new entrant introducing sustaining innovation, such as the case of
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Apple iPod, introduced in 2001, and keeping the same idea of the existing products (Schmidt
& Druehl 2008).
The difference between sustaining and disruptive innovation lies in the impact that
they have in the industry. Thus, when a technology is developed to improve the performance
of an existing product, it is called sustaining innovation (Christensen 1997b). In contrast,
disruptive technologies are characterized by introducing in the market new products with
different value propositions and shifting the dynamics of the industry, by underperforming
existing products (Christensen 1997b).
Although new product development is a beneficial activity to the enterprises it requires
facing several challenges. According to (Eppinger & Ulrich 2003), these main challenges are
the trade-offs between the present and future situation, dynamics given technology
improvements or changes in the customer’s preferences, details to ensure that everything is
done the right way, time pressure and decision making without all the information, and
economics regarding the increase on costs caused by the developing, producing and
marketing that the new products imply.
The success of new product development (NPD) is constraint by a set of factors, as
several different studies show (Tidd & Bessant 2009a). These two authors consider that there
are four main success factors in NPD. The first one is the product advantage, or in other
words, what the customers perceive to be better in the product when comparing with other
competitors. Secondly, the homework is essential to save time and money when management
assesses the market, the potential of the product and what the customers need. Therefore,
market knowledge assumes special importance in new product development. Thirdly, it is
relevant to understand to whom the company shall communicate and direct its efforts, which
means a clear product definition. Lastly, risks are present in all projects and processes and
understandings and how to avoid and mitigate, and how they will affect the new product
development is crucial for the success of the project.
According to (Tidd & Bessant 2009a), new product development is a process
composed by different stages, and each one is important to mitigate risks and uncertainty,
from the opportunity sensing to the product launching. As it can be seen in figure 1, there are
five different stages across the process, selecting the best ideas and eliminating the others,
meaning that the process works as a funnel. At the beginning of the project there is a large
number of ideas whereas at the end of the process it will remain one. Cooper & Kleinschmidt
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(2001) posit that, the first stage corresponds to a preliminary investigation, in order to
determine the merits and success of the ideas, selecting the best ones, allowing bad projects
exclusion and avoiding higher costs. Following, the second step means a detailed
investigation to each project, sensing its attractiveness through a detailed business case. This
activity is performed by the management team and seeks to understand if the specificities
match with the customers’ needs and wants or the financial potential, for instance. After this,
a prototype is developed, in stage three, in order to be tested, while the marketing and
manufacturing happen at the same time. The fourth stage corresponds to testing and validation
through some measures, such as customer acceptance, quality tests or understanding of
production costs. Finally, the last stage is the full production and market.
Regarding the pharmaceutical industry, the process of new product development is
characterized by two different moments. In the first moment, the firm proceeds to the
discovery of the molecule and it has the following steps: Target-to-hit, Hit-to-lead, Lead
optimization, and preclinical. The second moment takes place with the development of the
molecule and it is composed by the clinical trials: Phase I, Phase II, Phase III and submission
to trials. This process is very expensive, mainly the phases II and III of clinical trials, being
the main reason to the unsustainability of this R&D model (Paul et al. 2010).
“Pharmaceuticals are traditionally a high R&D and marketing intensive sector
(Garavaglia et al. 2012:678)”, this means that the pharmaceutical companies have huge
investments on research and development (R&D) to discover new innovative medicines.
Moreover, the requirements of the regulatory bodies have increased, which is translated in
additional costs namely developing better molecules to the market.
Figure 1 - Cooper's NPD Stage Gate Process
Source: http://www.melodiesinmarketing.com/2008/02/25/the-stage-gate-model-of-product-development/
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The pattern of growth in this industry has been the development and launch of a really
powerful and useful drug, also known as blockbuster, with a patent protection in order to get
back the investment made in this medicine. This business model, named blockbuster model,
was sustainable in the last century, but is in danger because three main reasons: the price of
inputs for both discovery and development are increasing, the time value of money is getting
higher regarding the time-to-market is more than 12 years, and the failure rate of new
medicines is increasing (Danzon et al. 2005). Additionally, blockbuster drugs are more
difficult to launch, meaning that the companies have to change their business model and
rethink on how they generate sustainable growth. This problem is evidenced by Munos
(2009), showing that during the last 60 years, although the increase in investments of
companies in the developing new drugs, the number of drugs approved by regulators has been
kept constant.
Given the problems of the R&D model in this industry, big companies need to adopt
some changes to overcome this threat in the industry. An alternative option may be raising in
some public institutes and universities. According to Danzon et al. (2005), the biomedical
knowledge is increasing in small companies. This fact evidence an opportunity for big
companies to establish partnerships with this small companies or even with universities,
which are bringing new projects and new medicines. These partnerships will be effective for
both parties assuming small companies can specialize on focused R&D, developing drugs for
specific diseases, meanwhile the big pharmaceutical companies help in funding their partners
and focus on commercialization and marketing activities, taking advantage from their well-
established supply chain (Savva & Scholtes 2014).
Additionally to small and medium enterprises, the big companies have the possibility
to partner with public institutes and universities. Universities are centres for creating and
sharing knowledge, but they may fail in managing the use of this knowledge (Tidd & Bessant
2009b). In this way, academic institutions normally spin-out their technologies, mainly in
software or biosciences sectors, in order to get commercial advantages from their intellectual
knowledge. In these cases, licensing partnerships are a natural options to companies and
universities (Tidd & Bessant 2009b).
Although product development is essential to the pharmaceutical industry, launching
the outcome is important to get the invested money back to the firm. Thus, understanding this
process may help in the comprehension of the problems underlying the present business plan.
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2.4. New Product Launching
The new product development is only the beginning of the process of providing better
products to the customers. As it is shown above, in the stage gate process for new product
development, launching is the last phase of the overall process. However, this stage is
characterized by marketing, distribution and sales activities, being the most expensive of the
process. Thus, it needs a special attention, in order to better understand the impact of
launching in the overall project.
In the case of new medicines, the pharmaceutical companies need to follow strict
legislation in order to have their products approved. The main regulators on approving
medicines are the Food and Drug Administration (FDA) and the European Medicines
Association (EMA) in the United States and European Union, respectively. Although being
mandatory to commercialize the drugs in both markets, the approval of these regulators is not
sufficient to introduce the medicines in the market, being this only the first step. The
following step is the negotiation with national entities to commercialize the drugs in the local
markets. For example, EMA approves the drug after several tests and documentation
confirming the results and side effects, but companies need to negotiate with national
authorities, which are around 30 bodies along the European Union (Hansen and Grunow,
2015).
Time-to-market is also an important factor to take into account. The innovative
medicines are commercialized under a patent protection that is conceded during the
development phase. However, in this phase there is low flexibility to reduce the time, mainly
in the phases II and III of clinical trials. Therefore, the market launch shall be optimized in
order to avoid delays on the launching (Bauer & Fischer 2000). The profitability and the
returns of the new drug depend on the time of commercialization under the patent protection
since the imitators are not allowed to replicate it. Yet, after the patent expiration, the imitators
easily launch generic medicines of the active compound being as efficient as the original but
with much lower prices though stealing market share to the innovator.
Before the product hits the market, the company shall ensure that the target market and
all the people that influence the customer to buy the medicine are aligned. “Market access
materials need to reach key decision makers – the people who make policies, scan clinical
research data for the emergence of new products and have responsibility for local budgets and
service planning (McGrath 2010:203)”. The marketing process is, therefore, complex given
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that there are a lot of influencers in decision of the final customer, which will mean high
expenditures in marketing activities. In this way, “Pharmaceutical companies typically spend
1.5 to 2 times their annual R&D expenditure on marketing and promotion activities (Bauer &
Fischer 2000:718)”.
Operation planning also assumes particular relevance in the sense that the company
must start the production before the launching of the product. In the pharmaceutical industry
this even more imperative because the “Portfolio and capacity investment decisions are all
taken years before market launch”, mentioned (Hansen & Grunow 2015:130). In the case of
outsourced production to contract manufacturing organizations, the time before the launching
shall be higher in order to establish agreements with the manufacturers and to give them some
time to plan the introduction of this new production (Boulaksil et al. 2011).
One of the toughest activities of a company in the phase of launching is to understand
how the demand will act. In this way, companies shall forecast their production to meet the
demand for their products. Given that, an effective supply chain management is essential for
organizational competitive advantage (Schneller and Smeltzer 2006, White and Mohdzain
2009, cited by Ghatari et al. 2015). Effective supply chain management (SCM) allows
companies to adjust their activities, such as production, to what the customers need in order to
optimize the utilization of resources. This will allow that companies will be less exposed to
external environment changes, being more prepared to give a quick and timely response to
adapt to it. Thus, lean and agile supply chains are efficient ways to ensure the profitability,
adaptability and viability of a company in the long run (Ghatari et al. 2015).
The topics talked above give a good contribute to understand the environment and the
main challenges to perform a business plan directed to the launching of a new innovative
drug. However, there are some important tools and methods related with business planning
that are important to explain, so the readers of this plan understand what is behind each
analysis and decision. Therefore, it is important to briefly explain the tools used to evaluate
both internal and external factors of the new product and how they will impact its viability.
2.5. Business Planning and Strategy
A current practice that characterizes the raising of a new small enterprise is the
elaboration of a business plan, being an important factor of credibility to important actors in
the area, mainly when an entrepreneur will present their business to an investor. Its
importance has been increasing along the years, being an important subject to teach in
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relevant universities. However, having a good business plan is not sufficient to succeed in
business, mainly for a start-up. In this way, there are several examples of companies that
appeared without a business plan, such as Microsoft, and a huge number of companies that
failed even with an exhaustive business plan. Moreover, there is empirical evidence that
companies are more likely to spend time and resources in the beginning of the project and
tend to forget this activity throughout the time, meaning that the business plan starts to be
outdated (Karlsson & Honig 2009).
“A business plan may be defined as a written document that describes the current state
and the presupposed future of an organization (Honig 2004:259)”. In order to perform an
accurate business plan, there a lot of different analysis that shall be performed, in order to
collect trustful information to delineate a strategy to face future challenges for the new
venture. Nevertheless, a successful strategy must ensure a consistent fit between the external
environment of the company and the internal factors, like the goals, values, resources,
capabilities and structural organization (Grant 2010). In this way, strategy becomes a central
pillar of a business plan given that it will connect the internal factors of a company with the
environment where the firm is inserted. Following this thinking, it is pertinent that in a
business plan shall be clearly separated the analysis of the external environment from the
internal analysis. Nonetheless, the business plan shall include a competitive analysis in order
to enhance the importance of the rivalry of the market where a company is inserted.
According to Grant (2010), there are four pillars that deliver a successful strategy. First of all,
a company shall know its goals in the long run, in a simple and consistent way. Secondly, the
management shall have a clear understanding about the competitive environment. Thirdly, the
resources shall be used in the most effective and efficient way to meet the needs of the
company. However, these three points are not sufficient. Thus, the forth pillar is the
implementation in an effective way, otherwise the strategy implemented will not succeed.
2.5.1. External Analysis
“The essence of formulating competitive strategy is relating a company to its environment
(Porter 1980:3)”
The environment plays an important role on a company’s present and future, shifting
the decision making of its management team. In this way, there are some useful tools that
shall be used in order to carefully analyse the external environment, in order to get the most
accurate prediction of what will happen in the future and what is happening right now. In this
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fashion, strategy definition will allow to be more competitive and ensure the survival of the
company in the long run.
Performing an environment analysis by source, decision makers can understand from
which source the factors that influence the enterprise come from. In this way, the PESTEL
analysis help the understanding of the origin of the forces (Grant 2010). This analysis is
divided in six main forces: political forces; economic forces; social forces; technological
forces; environmental forces and legal forces.
Regarding the political factors, they are all the constraints derived from the political
situation characterizing the market where the company operates. Thus, in this category are
covered the political stability, foreign policy of the country, tax policy or the democratization
process. Concerning the economic factors, these represent the economic situation of a
country or industry. It can be included in this topic the economic growth, fiscal policy,
national income, foreign debt, unemployment, and others. Thirdly, the social factors cover all
the social situation of a country, such as life-style, education level, democracy culture,
awareness of citizenship and others. The social factors characterize the way of living of the
overall population of the country. Fourthly, the technological factors represent the easiness
of an industry to access a use technologies, through investment on it. Some sub-factors of this
topic are the technologic investment policies of government, new patents arising, incentives to
R&D activities, adaptation to new technologies and the rate of change in technologies. The
environmental factors of the PESTEL analysis regard with eco-friendly concerning, the
impact of nature on the business and the infrastructures available. Therefore, the sub-topics
are the transportation infrastructures, traffic safety, public health, urbanization level, disaster
management and green issues. Finally, the legal issues include competition laws, judicial
system, customer rights, implementation of laws and international treaties (Yüksel 2012).
One important concept that shall be enhanced is the product life cycle, which consists on the
evolution of the sales of this product since the market introduction until its decline, passing by
the growth and maturity phases. However, since companies are organizations that sell
products or provide services, and an industry is composed by several companies, it can be
described by a life cycle too. Consequently, the industry life cycle is a key tool to evaluate
the macro environment of a company, being characterized by the same four phases of the
products: introduction, growth, maturity and decline (Grant 2010).
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As figure 2 shows, the introduction phase is characterized by a period of small sales
and a low market penetration rate, given the unknown products of the industry. Moreover, the
costs of production are high and the quality of products is low due to lack of experience with
the technology. Afterwards, in the growth stage there is an increase on the sales and market
penetration given the higher awareness of the products. To answer to the higher demand,
companies increase production, transiting from premium customers to the mass market.
Following this, the maturity stage represents the market saturation. Thus, sales are at the top,
facing a declining after this, and starts the phenomenon of replacement of old customers for
new customers or replacement of old products for new products. Lastly, the decline stage
happens when other industries produce substitutes that steal customers from the industry,
which impacts in a big decrease of sales (Grant 2010).
In order to conclude the literature review of the external analysis, the author must
explain the analysis of opportunities and threats. However, given that those two factors are
included in the SWOT analysis, which includes internal analysis variables too, opportunities
and threats will be described in the last topic of the literature review.
2.5.2. Internal Analysis
As it was stated above, the main objective to build a coherent and successful strategy,
is to ensure the survival of a company in the long run. However, a pillar to have a successful
strategy is the linkage between the company internal characteristics with its macro
environment. In this way, understanding the internal factors of a company is as important as
having a deep knowledge of the outside.
According to Grant (2010), there are four pillars that deliver a successful strategy.
First of all, a company shall know its goals in the long run, in a simple and consistent way.
Source: http://financetrain.com/industry-lifecycle-phase-and-ma/
Figure 2 - Industry (Product) Life Cycle
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Secondly, the management shall have a clear understanding about the competitive
environment. Thirdly, the resources shall be used in the most effective and efficient way to
meet the needs of the company. However, these three points are not sufficient. Thus, the forth
pillar is the implementation in an effective way, otherwise the strategy implemented will not
succeed. Being said that, in this section it will be explained the tools and approaches to have a
consistent knowledge of the company’s resources and capabilities.
The knowledge about the internal situation is crucial to a company’s management to
evaluate what shall be changed to align with the external conditions. As follows, a company
shall have clear and simple values and long term goals, which must be defined with the clear
knowledge of the resources and capabilities of the organization, and shall be reflected on the
structures and systems of the enterprise.
According Porter (1991), a company is composed by a group of economic activities
that are interrelated in order to create value and deliver it to its stakeholders. Thus, the opinion
of this author is that one of the sources of competitive advantage is the ability of the firm to
perform the activities, according to the strategy defined by the company. In order to evaluate
the source of competitive advantage and how the company creates value to its stakeholders, it
is important to analyse each activity separately and define which capabilities are important to
the company, so that the strategy defined is aligned with the company internal situation and
external environment. To help this analysis, it will be used the Porter’s Value Chain, a
framework that combines the main activities of a company with the supporting activities of it.
Following this thinking, the primary activities are defined as the core activities to a company
in order to deliver products or services to customers. Therefore these activities are defined as
inbound logistics, operations, outbound logistics, marketing and sales, and services. The
support activities are firm infrastructure, human resources management, technology
development and procurement, and they are responsible providing assets to primary activities.
Figure 3 - Porter's Value Chain
Source: https://www.mindtools.com/pages/article/newSTR_66.htm
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The utilization of this framework on a business plan is useful in determining the
alignment between the different activities of the company, and to understand the alignment
level with the strategy defined. Moreover, given that skills and capabilities derive from
performing the activities, this model is an asset on business planning by evidencing the
resources of capabilities available.
As it was said above, it is not sufficient to design and delineate an adequate strategy to
face the external challenges that the macro environment presents to companies, it is crucial a
successful implementation of that strategy. In order to evaluate the degree of implementation
of the strategy, it can be used the McKinsey’s 7 S. This framework defines seven different
factors that are crucial to the organization and divide them in hard and soft factors. Structure,
System and Strategy are considered the hard factors whilst Skills, Style, Staff and Shared
Values are considered the soft ones. This approach establishes a linkage between all the
factors, which imply that a change in one of them will cause shifts in the other six (Waterman
et al. 1980). Moreover, this framework helps managers to identify problems in strategy
definition.
Regarding the strength and weaknesses, they will be explained later in the SWOT and
TOWS Analysis Section of the literature review.
2.5.3. Competitive Analysis
Although competition is an important variable of the macro environment, its impact on
the performance of a company is too high, so its analysis will be performed separately from
the external analysis.
According to Porter (2008), firms compete for profits and this competition is not
limited to the boundaries of the industry. As follows, company’s products are not only
subjected to the competition of competitors but to substitute products. Moreover, if an
industry is profitable, it will bring new competitors to the competitive environment of a
company. In this way, the five forces that constrain the strategy of companies are described in
the Porter’s Five Forces model. This model aggregates those forces in five main groups, as
shows the figure 4.
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Companies develop products in order to serve their target market and obtain a
compensation for those products or services. In this way, the profitability of a company will
be dependent on the willingness to pay of its buyers and the elasticity of the demand for
prices increases.
Bargaining power of buyers represents this relationships and the power that
consumers have on the industry by being more or less sensitive to price changes. Secondly,
given that the supply chain of a company is not only composed by buyers, companies shall
take into account the Bargaining power of suppliers. The impact of price increases of raw
materials and the dependence level of a company to a supplier or a group of suppliers
determines the capability of a company to maintain its cost level, which is important to
maintain the prices, profits and margins. Regarding the possibility of competitive companies,
in a competitive and profitable industry there is always the possibility of entering new
ventures, bringing new solutions of existing products. The Threat of new entrants represents
the competition by profits within the industry. Other important products that affect the
profitability of a company is the Threat of Substitutes, products that do not belong to the
same industry but can provide identical solutions to customers. As follows, these products
attract some market share, decreasing the profitability of an industry. Finally, the
Competitive Rivalry represents the competition for profits among competitors of an industry
(Porter 1979).
The strategy adopted to face the challenges of competition shall consider not only the
competitive environment but the characteristics of the product and its potential market.
Therefore, in order to define an adequate strategy the company shall be focused on this two
factors, through the Ansoff’s Matrix. This framework is useful for defining new strategic
Figure 4 - Porter's 5 Forces
Source: https://en.wikipedia.org/wiki/Porter%27s_five_forces_analysis
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directions that are important for a company to compete in different sectors and markets
(Richardson & Evans 2008).
Regarding market penetration, the main objective is to increase share, which imply
strong marketing efforts to attract existing customers and non-customers to buy the product at
a very competitive price. However, existing products can be applied to other existing
segments. In this way, market development means efforts to target new segments,
distinguishing sustainable and genuine segments, allowing the company to have a wider
number of customers.
The introduction of new and innovative products can be seen as an opportunity to
create new market and industries, or to target those products to existing markets, in order to
substitute the existing products. Thus, when the strategy involves the development of a new
market it is called diversification and it is characterized by the development of a new market,
delivering an innovative proposition to buyers. Though, if the new products are directed to
existing markets, the strategy is named product development and is characterized by
incremental or disruptive innovation of existing products.
Although these tools explained above give a relevant contribute on the analysis of the
strategic situation of a company, their assumptions limit a deeper knowledge about the
sources of sustained competitive advantage. For one hand, these models assume that the
resources that deliver sustained competitive advantage are identical for all the companies in
an industry (Porter 1981, Rumelt 1984, Scherer 1980 cited by Barney 1991). In the other
hand, these theories assume that the resources used by companies in the implementation of
their strategies are highly mobile (Barney 1986, Hirshleifer 1980 cited by Barney 1991).
Figure 5 - Ansoff's Matrix
Source: http://www.mejoracompetitiva.es/en/2012/06/resucitando-a-igor-ansoff-tres-claves-para-decidir-como-innovar/
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Being said that, there is a lack in the analysis, which implies the adoption of other tool in
order to understand the sources of sustained competitive advantage.
In order to understand the real sources of competitive advantage, VRIO Framework
will be used. This method allows to examine the best way to use the resources and capabilities
of a company according its strategy. According to this tool, the company’ resources shall be
Valuable, Rare, difficult to Imitate, and easily adopted by the Organization, otherwise a
company will not enjoy for sustained competitive advantage (Barney 1991). In the absence of
all these characteristics, a company has competitive disadvantage, if the resources are only
valuable, the company has competitive parity. However, when the resources are costly to
imitate, a company enjoys from temporary competitive advantage, but if the resources are
not exploited by the organization, the enterprise will only have unexploited competitive
advantage (Barney 1995).
Since strategy is a bridge between internal and external environment of accompany,
after having a deep knowledge of the macro environment, it will be performed the analysis of
the micro environment.
2.5.4. SWOT and TOWS Matrix
As it was said before, one of the main functions of strategy is to bridge the company’s
external environment and firm’s internal structure and resources. In this way, SWOT analysis
provides a different approach from the other tools given that analyses together both internal
and external factors and forces regardless the company is in a debilitated situation or not. Yet,
there is a mandatory clear distinction to do. SWOT analysis divides advantages and
disadvantages between internal or external factors. In this way, the internal factors are named
by strengths, in the case of an advantage, or weaknesses, if they represent a disadvantage to
the company. Regarding the external environment factors, a company have opportunities
when there are situations that bring value to the company. Opposite to this, threats are
considered as situations that can negatively affect a company’s performance (Houben et al.
1999, Dyson 2004).
Although SWOT analysis is a useful approach in sensing the strengths, weaknesses,
opportunities and threats, the utility in defining a strategy is little. This strategic tool is limited
in the building phase of a strategy because it assumes that a good strategy comes from a good
fit between the internal resources and external events (Agarwal et al. 2012).
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With the knowledge obtained from performing the SWOT analysis, it is relevant to
understand the important relationships between each internal and external factors and base the
strategy definition in them (Weihrich 1982). As follows, TOWS analysis establishes the
linkage between the strengths and weaknesses with the opportunities and threats meanwhile
defining strategies for all quadrants.
As the image above shows, there four types of strategies emerging from this analysis.
In this way, SO strategies mean strategies to improve the strengths of a company maximizing
the opportunities. Regarding ST strategies, they mean the leverage of the strengths in order to
minimize the threats that come from outside. In the other side there are strategies that involve
the deep exploitation of the opportunities to minimize the weaknesses of a company, named
WO Strategies. Finally, WT strategies are strategies that aim to contradict weaknesses and
threats through defensive strategies.
In this section of the literature review, all the most important tools of the business plan
and strategy definition was explained. Therefore, the author considers that the readers are well
informed to understand the logic behind the business plan and the analysis performed.
Anyhow, it is paramount that readers understand the ways used to get the data and
information to include in the analysis. As follows, the next chapter of the current thesis is
about methodology.
Figure 6 - TOWS Analysis
Source: https://uwemarketingaudit.wordpress.com/2014/08/03/identify-swot-tows-analysis/
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3. Methodology
3.1. Research Question
The question of the investigation assumes an important role in the subsequent work
developed. Therefore, the question shall represent, in one hand, the main goal to achieve in
this project and, in the other hand, define the boundaries for the dissertation.
Regarding the theme chosen to this dissertation, based on the possibility of working
with the investigators that developed this technology, the starting question of this dissertation
is:
“Is the commercialization of a prophylactic medicine, based in a new technology and
directed to travellers to endemic regions for Malaria, economically viable?”
Given that this question will guide and bound the subsequent research, it is important
to ensure the clarity, pertinence and practicability of the question presented.
In what concerns with clarity, the investigation’s question is done in a way that allows
the readers to understand immediately what is the theme being approached during the
dissertation. Therefore, the question is descriptive, by defining the main goal of the
investigation and constraining the research to its objective.
The pertinence of the research question can be understood by analysing if the question
is adequate to the problem under analysis. Therefore, the question stated above allow the
author to understand his objective and focus in the main objective of the project, meaning that
the question is adequate or pertinent.
Regarding the practicability, the question is realistic by representing a real problem to
the target under analysis. Moreover, the problem is practicable because it is limited to a
specific and finite number of people.
Taking into account all the arguments stated above, the author considers the research
question relevant since the aim of this project is to evaluate the commercial viability of the
technology under analysis. However, the industry under scrutiny bounds the investigation by
requiring an exhaustive analysis to mitigate the main risks of a market characterized by high-
quality research and development costs (R&D costs) and several legal restrictions.
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3.2. Objectives
After defining the question of investigation, it is important to identify specific
objectives underlying this business plan. These will allow the readers to follow and
understand the logic behind the business plan. Therefore, the specific objectives of this
project are:
1. What are the characteristics of the travellers that go frequently to malaria endemic
regions?
2. What is the size of this target?
3. Which are the main substitutes and competitors of this prophylactic medicine?
4. Which is the adequate strategy to implement successfully the plan?
5. Which is the adequate business model to be adopted?
6. How much money does the company needs to invest to start this business?
7. What are the main risks that threaten the execution of the plan? How to avoid them?
8. What should be an adequate exit strategy to this business? How shall the business be
communicated to potential investors?
The first two questions are a useful way to know who are the potential customers
targeted, using their profiles to perform an exhaustive segmentation of the customers, and to
understand the potential of the business. Moreover, knowing the clients with detail helps to
adopt an adequate value proposition.
Regarding the third question, it helps the author to analyse the rivalry patent to this
industry, being an important tool to define the strategy. This question represents a link to the
fourth and fifth questions, in order to define the best strategy and business model to the
company.
Other important remark to take with this dissertation is the investment needed to start
the business. Therefore, after performing the forecasts needed, the author shall be able to
understand how much money is needed to start the company, as it is asked in the seventh
question.
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Additionally, the author shall understand all the risks that threaten the execution and
success of the project, understanding the best way to avoid them or, at least, to minimize their
impact in the business.
Finally, the author shall reflect on understand if the business can be managed by itself
or there should be an exit strategy. Therefore, the author must theorize about this exit strategy
and how will the communication happen.
3.3. Methodology
The methodology of an academic dissertation shall be an instrument to explain to the
readers the steps followed and the train of thought of the author during the development of the
project. The methodology can follow three different paradigms, depending on the kind of
work being performed: positivist paradigm, interpretative paradigm, or critic paradigm. In this
dissertation, the author focus is work in the interpretative paradigm because he uses real
information collected from databases, books or other articles and sites to justify his thinking
and the strategies and decisions defined to this business plan. Moreover, since there is the
interpretation of the reality in order to adapt the work to it, the paradigm used must be
interpretative.
3.4. Methods
Regarding the collection of data and its interpretation, the author needs to know the
size and characteristics of each segment of market, in order to decide the one that has more
advantages to the success of the plan. Moreover, the author uses some tools, such as SWOT
analysis or Porter’s 5 Forcer, to organize his line of thought, providing the arguments and
results from this analysis and basing his decisions on them. Besides the qualitative analysis,
the author resorts to quantitative analysis such as the financial forecasts that help the author to
justify the final remarks of this project.
The methodology used during the elaboration on this work is based on several sources
of information that can be joint in some main groups: academic databases, such as B-on or
EBSCO, academic books, academic papers and websites of important institutions on the area
under analysis.
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4. Presentation of the new business
The objective of the current chapter is to explain the main characteristics and goals of
the new venture created from an academic spin-off. In this way, it will be explained how the
opportunity was detected by the researches that developed the technology, the technology and
the main features, and how it will be introduced in the market. Thus, the following topics will
introduce in a briefly way how the idea has aroused.
4.1. Business Opportunity
Malaria is caused by a parasite named plasmodium and is transmitted to people
through the Anopheles female mosquitos. This mosquitos are restricted to tropical regions,
such as Sub-Saharan Africa, Central and South America, and South and Southeast Asia.
In 2015, the impact of malaria on human populations was lower than in earlier years.
However, there are 3.2 billion at risk of being infected meaning more or less half of the
human population. Moreover, World Health Organization estimates 214 million cases in the
current year and causing 438 thousand deaths.
Regarding the impact of malaria in the global wealth, the programs developed to
reduce this threat have been very expensive, mainly in the endemic regions for malaria.
According the World Bank, it is estimated that malaria has a negative impact of 1.3% per year
on the GDP growth of the endemic countries, meaning a loss of €11 billion. Additionally, the
expenditure with malaria related problems is €2.5 billion, according the Roll Back Malaria
Partnership.
Source: http://www.rollbackmalaria.org/microsites/gmap/endemiccountries.html
Figure 7 - Distribution of Malaria around the world
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Regarding the prophylactic medicines available to travellers, there are some negative
points that constrain the choice of the buyers. There are five medicines available that are
Atovaquone/Proguanil, Mefloquine, Chloroquine, Primaquine and Doxycycline. The main
struggle of using this drugs to prevent the infection is that the side effects can be very severe.
In addition, these drugs are not effective in all the endemic regions.
Given that the prophylactic medicines have some cons, there is a high percentage of
travellers that do not take those pills, carrying the risk of being infected. This problem is
enhanced by a study of Maltezou et al. (2014) that shows the Greek situation, where only half
of the population under analysis went to a pre-travel consultation and 66.8% of the travellers
took chemoprophylaxis preventive medicines. Furthermore, this represents a threat to non-
endemic countries because the travellers can bring the parasite to their home countries.
Being said that, it is evident a relevant business opportunity targeting the travellers to
malaria endemic regions, that are estimated to be between 80 to 90 million (Petersen &
Schlagenhauf 2008), distributed between Sub-Saharan Africa, Central and South Americas,
and South and Southeast Asia.
4.2. Technology
AMS proposes to deliver a solution for different lacks in the market. The technology
that this start-up aims to develop allows fighting different diseases caused by similar
parasites. Although the business plan targets malaria as the main problem, this technology can
be used in a similar way to treat Leishmania or Trypanosome.
The technology behind the product developed consists on the combination of already
approved molecules for human beings. The application of this combination strongly
attenuates the reproduction of the parasites in the human liver, reducing the symptoms of
malaria to infected human beings. As well, the compounds used to produce these pills are
known by having very low side effects, which is totally different from the competitors
identified.
The main advantage of this technology remains in the fact that the compounds used
will trigger the illusion to the malaria parasites that there is not enough food in the
environment. Even if the environment is full of energy, the parasite will not sense it, so it will
adopt a strategy that will allow it to live longer. As follows, the parasite will stop reproducing,
which will help people to treat the malaria.
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Being said that, the technology developed represents the introduction of a new and
innovative paradigm on fighting parasite diseases. Nowadays, all the existing medicines focus
on killing the parasites in the human blood. This traditional approach improves the natural
selection of the parasites, which means that the resistance of medicines on the long run is
more willing to happen. This is the main problem of the current medicines so that quickly
becoming ineffective to treat malaria. Additionally, these existing drugs cause some
dependence on users, which has impact on their health after stopping the treatment.
Conversely, this technology presented does not try to kill the parasite by creating an adverse
environment, which means a lower level of natural selection and, therefore, drug resistance.
Currently, the problem of drug resistance reduces the five available prophylactic medicines to
only two or three, regarding the geographic location of the destination of the travel.
Moreover, the compounds used in Prophyl-ACT are known by lack of dependence, which
constitutes an improvement to users.
4.3. Product or Service
AntiMalarial Solutions is proposing a new approach of fighting malaria, as it was said
above. The method used to deliver this solution to the market is through a treatment of pills
with a prophylactic effect. In this way, Prophyl-ACT will be sold as a tablet of pills enough to
one week travel to endemic regions, including a period before and after the travel. This
product will be available in pharmacy shops of the countries of origin of those travellers.
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5. External Analysis
The external analysis will comprehend the analysis to the macro environment that
underlies the commercialization of this technology. However, to perform a deep analysis, the
author will use some tools such as the PESTEL analysis, the industry map, the industry life
cycle and the external components of the SWOT analysis, which are the threats and
opportunities.
5.1. PESTEL
This analysis is a framework that combines and describes the underlying forces of the
company’s activity, being important to enhance the factors that are expected to have a
paramount impact on the companies. In this case, it will be described the macro environment
that shifts the activity of AntiMalarial Solutions and the product launching of Prophyl-ACT.
5.1.1. Political Forces
Regarding the political forces, these include changes in tariffs of trade, mainly in what
concerns to external policy of the countries, tax policy and fiscal policy of the countries. In
this way, there are some important factors to enhance.
Being this company located in Portugal, it is relevant to briefly explain the
international trade situation of this country. As an European Union (EU) Member, this
country has access to a free trade zone, implying that the trade between other European Union
members is free of tariffs. As follows, there is a great opportunity to export the product to
other members that have strong relationship with countries endemic for malaria.
Nowadays, the EU and USA are trying to ease the trade between them. The
Transatlantic Trade and Investment Partnership has been negotiated and it will offer some
advantages to countries and companies on both sides of the Atlantic Ocean. In what regards to
AMS, which is a Small and Medium Enterprise (SME), this partnership will facilitate the
internationalization of SMEs by removing customs duties, simplifying customs procedures,
reduce the costs of diverging standards or improve protection to property rights. Also, there
will be a helpdesk that gives information to custom duties, taxes, regulations and customer
procedures and market opportunities (TTIP Factsheet in SMEs, 2015).
Regarding the tax policy, the main changes that are predicted to happen are the taxes
on corporate profits. The previous government decided, in 2013 that it was important to the
economy a reduction on taxes on profits. According to this tax reform, in 2016 it is predicted
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that the tax rate on profits will be between 17% or 19%. The main change that this new
government wants to change is the participation exemption. Regarding the tax reform
document, this exemption was of 12 years, but the new government wants to change it to 5
years to depreciate losses (PWC, 2014).
5.1.2. Economic Forces
This section of the PESTEL Analysis relies on the economic indicators that can shift
the viability of the project. This may include, for instance, the inflation rate, the economy
growth rate, interest rates and/or other indicators.
In the economic field, it is important to understand the current situation of the global
and local economies nowadays and how it is predicted the evolution of those economies in the
long run. Regarding that Prophyl-ACT will be sold globally, the economic indicators of the
several economies are relevant because they will be a pillar to a subsequent strategy decision
making process. Yet, the target market of the new drug is in the developed countries of the
world, so this analysis will have a bigger focus on the EU and US economies. Moreover,
given that the origin of the company is in Portugal, the economic situation of this country will
be highlighted, too.
The last data available from Eurostat (Eurostatistics – Data for short-term economic
analysis, 2015) shows that the global economic growth is decelerating given a slowing down
of US and China economic growth. Although this deceleration, the Chinese economy is
predicted to grow 6.9% in the third quarter of 2015. In top of that, the other important
economy of the world, the EU economy, is already decelerated, both in the Member states of
the European Union and the Euro area.
Concerning the inflation rate, it was expected around 0.0% in October 2015,
recovering from negative values of September 2015. In order to overcome this situation, the
European Central Bank decided to promote a program of Quantitative Easing to the European
economy. The result of this program was a small increase on the inflation rates, the decrease
of the interest rates to negative values. Furthermore, the exchange rates have suffered some
changes, such as the euro/US dollar exchange rate that increased to 1.12 US dollars for each
euro (Eurostat 2015).
Although the integration on Euro area and European Union, some countries, mainly
those in the periphery, have been facing some extra difficulties. Portugal has exited from an
international financial help program, provided by the International Monetary Fund, the
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European Central Bank and the European Commission, some years ago and it has some
economic constrains that affect the economy and life style of its society. Therefore, the
increase on taxes and the decrease on family’s income caused a long period of recession on
the Portuguese economy. However, recently started to give positive signals and, in 2014,
there was an increase of 0.9% (INE, 2015). Also, the inflation within the Portuguese economy
has had values around zero, being -0.3% on 2014 (Fundação Francisco Manuel Dos Santos
2015).
5.1.3. Social Forces
The main social forces that constrain this company and product launching are related
with those people who travel to malaria endemic regions, what affects their decision and why
they go there.
The numbers of tourism are an important source of information to the social forces of
the PESTEL analysis. According the World Tourism Organization (2015), the tourism,
worldwide, increased 4.3% in 2014 and it forecasts an increase between 3% or 4% for 2015.
In the long run, this organization expects 3.3% as an annual growth rate between 2010 and
2030, meaning a total of 1.8 billion arrivals in 2030.
Although the data collected from the World Tourism Organization is important, these
numbers are not correspondent to the malaria endemic regions. Focusing on these locations, it
is estimated that there are between 80 million and 90 million people that travel to these
regions (Petersen & Schlagenhauf 2008). Anyhow, the purpose of the travel is not the same
for all the people, and it could be work, recreation, religious reasons and others.. According to
(Maltezou et al. 2014), the most common travel purposes to travel to endemic regions for
malaria is work travels (39.7%). Consequently, it is important to have a great focus on this
main group in order to understand the variables that affect their decision-making. Therefore,
people that travel to malaria endemic regions with work purposes have enough purchasing
power to buy prophylactic medicines. However, the side effects of these drugs and the body
habituation to the drug have an important weight in the final decision (D’Acremont et al.
2007). In this case, the main reason explaining this fact is that travellers hear about people
with problems caused by prophylaxis. Additionally, people who do not take prophylactic
drugs is usually between 21 and 40 years old.
Finally, given that these travels have a duration of one month or less (38.1%), some
people take the risk and avoid the prophylaxis.
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5.1.4. Technological Forces
Technological forces may be understood in two different ways. In one hand,
technological forces can be interpreted as the launching of new innovative medicines that can
overcome the position of already established drugs in the market. In the other hand, the
technological factors represent the already available and used technologies in the operations
and marketing processes, as well as new innovative technologies that can reduce production
costs and optimize the processes.
The second case described above will not be described so deeply as the first one, given
that Prophyl-ACT will be licensed to other pharmaceutical company after the first phase of
clinical trials or, maybe, after the second phase of clinical trials. In this way, the technological
innovation that may affect the production is under the responsibility of the AMS client.
In what regards to the emergence of new medicines that can fight malaria, there are a
lot of efforts of both private and public funds that give incentives and financial support to
research and development in the area. For instance, Bill and Melinda Gates Foundation is
giving million dollars per year to institutions that are developing technologies that can
eradicate malaria in the world. In this way, given the lack of an effective and efficient drug in
the market to decrease the negative impact of malaria in human populations, and these
worldwide efforts in research and development it is highly possible the launching of a new
competitor drug that will cause important risks to this project. Being said that, the company
shall not stop the R&D after the out-licensing of Prophyl-ACT and, so, proceed to further
investigation to improve the drug or develop a new one.
5.1.5. Environmental Forces
The pharmaceutical industry does not have specific environmental issues when
comparing with other industries. However, the increase of an eco-friendly awareness and the
need of reducing the carbon footprint may imply some extra-costs to pharmaceutical
companies. Moreover, the usage of less aggressive methods to the environment may imply a
different approach in the company’s organization.
5.1.6. Legal Forces
The legal forces on the pharmaceutical industry are probably those that most affect the
performance of companies. Given that the products that will be launched will cause some
effects on human populations, there is a high burden of legislation that must be respected in
order to commercialize medicines. In this way, companies must submit the new medicines to
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many and costly tests in order to warrant that the drug developed is safe to be used in humans
and that it will accomplish its function.
There are two important regulators that can approve drugs to be commercialized on
human beings and animals. In Europe, the European Medicines Agency (EMA) is responsible
for regulating the European pharmaceutical market whereas in the United States, Food and
Drug Association regulates the pharmaceutical industry (FDA). In this way, any product that
aims to be commercialized in the developed countries must be approved by these two market
regulators.
To get the approval of these regulators, a product shall pass in a set of clinical trials
(high costly and high time consuming) being one of the reasons that explain the long time to
market periods on the pharmaceutical industry. Clinical trials consist on a battery of tests
applied on human beings in order to study the reaction of these people to the medicine, so the
safety of drug administration on humans can be understood (FDA, 2015). These clinical trials
are composed by four phases:
Clinical Trials - Phase I – using a population between 20 to 100 volunteers or people
caring the disease, the purpose is to study the safety of the drug and the right dosage,
taking several months to execute. It is estimated that only 70% of drugs move to Phase
II.
Clinical Trials - Phase II – this phase requires the use of several hundred people with
the disease, and it can take between several months to two years of trials. This phase
will challenge the efficacy and side effects of the drug and it is estimated that only
33% goes to further trials.
Clinical Trials - Phase III – the third phase of clinical trials requires a population
between 300 to 3000 people ill, in order to understand the efficacy and monitor the
side effects of the drug. After this phase, which length can be for 1 to 4 years, only 25-
30% of drugs are approved to the final phase
Clinical Trials - Phase IV – this is the last phase of clinical trials and it needs several
thousands of volunteers with the disease, in order to estimate its safety and efficacy.
After the clinical trials, there is a review made by the regulator in order to evaluate if
the product can or cannot go to the market.
Although there is more legislation to regulate the pharmaceutical industry, what was
described above is the big deal in the industry and one of the reasons to the unsustainability of
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the Blockbuster Business Model. For one hand, clinical trials are very expensive, which
implies high investment needs, mainly in new comers to the industry. On the other hand,
clinical trials represent a selection process given that only a small number of drugs developed
are approved after clinical trials, causing high R&D costs.
5.2. Industry Map
The industry map is a tool used to describe the complete supply chain of a company
and what are the most important relationships within it to a company. In this way, it is
important, throughout this process, to identify the manufacturers of raw materials, the
suppliers, distributors, wholesalers and customers. In other words, industry mapping helps to
identify the upstream and downstream relationships that a company shall keep. The industry
map that represents the pharmaceutical industry can be described as follows:
Starting from the beginning of the process, the producers are composed by those
companies that extract the raw materials to produce Prophyl-ACT. As it was mentioned
above, this drug results from the combination of different already approved compounds, so
their producers are well known.
Regarding the manufacturers, these represent the companies that may combine the
different compounds into a single product. These companies provide support to
pharmaceutical companies in manufacturing and in the packaging processes of the medicines.
Companies like Parchem (USA), Bactolac Pharmaceutical Inc, AIDP Inc, AIBMR Life
Sciences (USA) and Nexira (France) are within this group.
The pharmaceutical companies are the central group in the industry map in this
business plan. AMS is present in this group, which is composed by different types of
companies. In one hand, there are companies that focus on R&D and aim to out-license their
products to the giants of the pharmaceutical industry or to be bought and integrated on their
structure. This is the case of AMS, whose business model focus on providing innovative
solutions to the industry. In the other hand, the big pharmaceutical companies are
characterized by investing on the development of blockbusters in order to have revenues of
billions in the market. These companies have an important role because they have power to
Producers ManufacturersPharma
companiesDistributors Final Seller Travellers
Figure 8 - Pharmaceutical Industry Map
Source: Author
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merge with other companies or acquire smaller ones to commercialize their products. In this
business plan, these big companies can be understood as possible clients of AMS given that
they may buy the industrial property of Prophyl-ACT. In this group, there are companies such
as GSK, Pfizer, Novartis, Roche or Merk.
In order to have lower distribution costs, a company in this industry shall utilize
synergies with well-established distributors and wholesalers, lowering the operation costs and
fixed assets. In this way, the entrance in each country’s market shall be made through a
partnership with the most competitive distributors, which deliver medicines to hospitals and
pharmacy shops.
Final retailers are represented by the pharmacy shops where the medicines will be
available for sale, where the final customers, those 80 million people can buy Prophyl-ACT
before going to malaria endemic regions.
5.3. Industry Life Cycle
The industry life cycle is an important approach to understand the attractiveness of the
market where a company operates or where new companies want to enter. Therefore, it is
important to identify the phase of the pharmaceutical industry is in order to understand if it is
worth to enter this industry and which could be the best strategy to do so.
As it was described in chapter 2, the growth stage of the industry life cycle is
characterized by fast market penetration, standardization of dominant technologies, quality
improvements through the emergence of a dominant design, mass production and competition
for distribution, exports from developed countries to the rest of the world, several transactions
through mergers and acquisitions and several companies entering the industry (Grant 2010).
Taking into account what was described above as characteristics of an industry in the
growth stage, the pharmaceutical industry can be consider as an industry in growth. In this
way, a lot of different medicines are launched every year, which implies a longer duration of
this growth stage. In this specific case, the patent protection required to commercialize an
innovative medicine extends the length for each product by conceding a quasi-monopolistic
position to the inventor. Moreover, the concentration of knowledge in universities and public
entities contribute to the appearance of biotech based start-ups, aiming to enter the market.
However, given the big investments that are vital to launch the product, these start-ups tend to
be bought by pharmaceutical giant companies, through acquisitions processes. Furthermore, it
is common in the industry the existence of mergers between big companies, as it happened in
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the case of Pfizer and Allergan, which signed a merger deal that is considered the biggest in
the history (Fortune, 2015).
Considering what was said above, the company might be optimistic with the
development of this drug due to its characteristics. In this way, it is expectable that there will
be one, or maybe more, companies interested in commercializing this drug, given that the
market is growing and the drug has important advantages in core characteristics to its
competitors, such as the low severe effects and the absence of habituation of the human body.
Moreover, the patent provides a privileged position in the commercialization, which can
attract a big number of customers to this product. Concluding, given the phase of the industry
life cycle, it is highly possible that more than one company will be interested on acquiring the
patent of Prophyl-ACT.
5.4. Opportunities and Threats
Opportunities and threats are the external factors of the SWOT analysis that can
constrain both performance of a company and the decision making whilst the strategy
definition. In a brief explanation, opportunities can be described as external events that may
create value to a company if it invest to enjoy this event. In contrast, threats are external
events that can threaten the performance of a company and shall be avoided. (Appendix,
Table 26 – SWOT Analysis)
Opportunities
Market size;
Market growth, due the sustainable increase on the numbers of tourism;
Existing and well-established distribution channels;
High number of travellers that do not take prophylactic medicines to avoid malaria;
Important lack on prophylactic solutions to avoid malaria;
Possibility to out-license the drug to well-established pharmaceutical companies;
Possibility of using the technology in different applications;
Adverse effects of the existing prophylactic medicines
Threats
Low price of direct competition
Worldwide effort to develop alternative products to treat malaria;
High possibility of new entrants with better solutions.
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6. Internal Analysis
With the internal analysis, the author aims to understand the internal situation of the
underlying technology/project, in order to define a coherent strategy that will allow the fit to
the most important objectives defined.
6.1. Organization’s Structure
AntiMalarial Solutions is a pharmaceutical company created to develop innovative
technologies focused on the fight against malaria. So that, it is essential to make a clear
division between the period before the market launch of its product, the Prophyl-ACT, and the
product launch and subsequent commercialization. Being said that, AMS will only develop
the medicines until the end of Phase I of Clinical Trials, proceeding to the sale of the patent of
the drugs developed afterwards.
Although the company will only held responsibility on developing the medicine, it is
important to continue the exercise and present all the variables that may affect the commercial
viability of Prophyl-ACT. Thus, after the presentation of AMS’s structure, it will be presented
a suggestion of a structure of the company as if the company would go to the market, with the
correspondent cost structure, investments, variables and the potential of sales. With this, the
author aims to collect enough information to present to a possible buyer during a negotiation
round to proceed to the transaction of the industrial property.
Considering what was said above, the company will have a simple structure to operate.
Given that the company aims to develop innovative solutions to reduce the malaria burden,
the core activity of the company will be the research and development. Thus, the
organizational structure can be represented in the following chart:
CEO
CIO
R&D Staff
Mkt Manager
Personal Assistant
Figure 9 - AMS Organizational Structure
Source: Author
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At this stage AMS team will be composed by the CEO, a CIO responsible by R&D
Staff, a Personal Assistant to support the CEO and a Marketing Manager. Their own
responsibilities are different, concerning their place in the structure and will be described
below.
Chief Executive Office
The CEO has the responsibility of managing the company as well as for the decision-
making process. In this way, the CEO shall delineate the strategy that the company shall
follow and ensure that all departments are coordinated in order to accomplish with this
strategy. In this way, he will have functions of managing and monitoring the daily activities in
order to ensure that the objectives are achieved.
He will also play an important role on R&D strategy definition, as well as the
communication strategy, giving some support to both CIO and Marketing Manager,
respectively. In the case of R&D, the role of the CEO is essential to delineate the pipeline of
investigation. In addition, the CEO is responsible for the process of human resources
management.
Concerning with the company external relations, the CEO shall be present on
international events related with drug development and malaria, in order to create a strong and
valuable network to the company, as well as giving visibility to AMS. These two functions
will be crucial in the company’s accomplishment of its goals.
Personal Assistant
This person will give support to the CEO, mainly in managing the CEO agenda, by
scheduling his meetings and participation on all the events. Moreover, this staff must provide
support on preparing documents to the CEO.
Chief Innovation Office
The CIO of the company will be a Senior Ph.D Researcher, with expertise and
experience on the R&D, mainly in the field of malaria. His main task will be the management
of the R&D process and the coordination of his team. Moreover, the CIO will discuss the
strategy of his department with the CEO, as well as the strategy to define the pipeline of
investigation that the company shall follow. Finally, when there are needs of human
resources, the CIO will have the final decision on recruiting staff to his department.
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R&D Staff
The R&D team will be composed by a Clinical Trials Specialist and several Lab
Technicians with some experience in this area.
Concerning the Clinical Trials Specialist, he will be responsible for all the process of
the Phase I of Clinical Trials. Their main functions will be the preparation of the product to go
these trials, to manage this process and to be coordinated with the other R&D members in the
lab. This staff must report to the CIO. He will also be responsible for all the matters regarding
approvals and product registration processes.
In the other hand, the Lab Technicians will be responsible for the daily work on the
lab, mainly by performing the scientific experiences in the development phase, reporting all
the information to the CIO.
Marketing Manager
The Marketing Manager will be responsible for developing an adequate strategy for
two different audiences. In one hand, the marketing manager shall develop a consistent
communication strategy to the financial investors of the company, in order to raise enough
funds to pursue with this project. In the other hand, he shall define the communication
strategy to attract possible buyers to the patent protection.
Concerning the potential buyers, this staff must travel, when needed, with the CEO in
order to publicize the company to other important external entities. In this way, he shall not
only report to the CEO, but align his agenda with him.
Now, that the company’s structure is defined, the exercise shall continue, supposing
the company goes to the market and commercialize itself the product. It is important to
enhance that this is only made in order to have an accurate idea of the commercialization
value of Prophyl-ACT.
Considering what was said above, the following company’s structure would exist if
AMS would go to the market, instead of licensing the product:
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In this structure, the CEO, CIO, Administrative Staff, and R&D Staff have more or
less the same responsibilities of the real structure of the company. The Marketing Manager
will have additional tasks mainly in the definition of the marketing mix.
Regarding the other members in this structure, the Sales Manager will be responsible
for managing the sales force as well as give support to clients of the company. The sales
representatives will sell the product to well-established distributors in each country and to
communicate intensively with tropical diseases doctors to promote the product. Concerning
the Procurement Staff, it will be responsible for acquiring the best possible raw materials at
the lowest price possible and deliver it to the manufacturers. After the manufacture, the
Quality Control Manager will responsible for evaluating the final product in order to
guarantee the high quality of Prophyl-ACT.
6.2. Porter’s Value Chain
Porter’s value chain allows decision makers to understand if company’s main
activities are well divided among the right departments so that answering the question: how
does the company creates value for its customers.
As it was said before, AMS is a company focused on developing new solutions to
reduce the burden of malaria worldwide. Given that, its focus on R&D will allow developing
more innovative solutions based on the expertise of its staff. However, in order to provide a
deeper evaluation to external entities, it is important to identify the source of value creation of
the company and to explain the interactions between the different activities of the company.
CEO
CIO
R&D Staff
Mkt Manager
Sales Manager
Sales Rep.
Quality Manager
Admin. Staff
Figure 10 - Organizational Structure of Commercialization
Source: Author
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The support activities of AMS will be performed mainly by the CEO and the Personal
Assistant and the CIO. Thus, the CEO will manage the human resources of the company.
Regarding the procurement and technology development, this will be responsibility of the
CIO, in order to bring to the company the most sophisticated technology, and to purchase the
materials needed to the R&D staff.
The primary activities will be relegated to the R&D department that will work on
developing innovative technologies in order to the company sell its patent to other companies.
In this selling process, the marketing manager will have an important role in defining the
adequate communication strategy to attract the higher number of companies interested in
acquiring the patents of the company.
6.3. McKinsey’s 7S Framework
McKinsey 7s will provide, at this point, an important summary about the internal
alignment of the company, so that answering to the external challenges that AMS faces.
Structure
AMS has a simple structure focused in its core activity, and with other supporting staff
to accomplish other activities in order to have an efficient method of work.
Strategy
AMS’ strategy is based on the main source of its competitive advantage which is the
technical competencies of its staff, allowing to develop innovative technologies.
Systems
The organization of the daily work allows the company to divide clearly the daily
tasks according to the expertise of its staff.
Skills
The company aims to recruit people not only with well-developed hard skills but with
soft skills like teamwork, cooperation, leadership and resilience..
Style
The company’s leaders shall be practice a leadership focused on people, in order to
improve the motivation of work, recognizing and giving incentives based on people’s work
merit.
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Staff
The company shall recruit people with strong experience in the area, mainly in
pharmacology and malaria, allowing efficiency in the R&D process.
Shared Values
The company and its workforce shall have high determination to achieve great goals,
efficiency, dedication and innovative thinking to develop the company.
6.4. Strengths and Weaknesses
Regarding the internal perspective of SWOT Analysis, the variables can be organized
as strengths, which correspond to the determinant capabilities and resources to achieve
success, and weaknesses, characteristics of a company that may cause a negative impact in
specific situations. (Appendix, Table 26 – SWOT Analysis)
Strengths
Easy Communication of the solution delivered;
Product performance;
Team’s knowledge about the area of malaria;
Use of already approved compounds;
Simplicity of the organization’s structure;
Tasks well defined within the company;
Weaknesses
Legal procedures require high investments;
Lack of network to establish the needed agreements and partnerships;
Lack of knowledge of the total costs of the business;
High funding needs due to expensive R&D;
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7. Competitive Analysis
Although competitive analysis can be included on the external analysis, it assumes a
relevant role on strategy definition and performance of a company that justifies this
separation. The focus of the competitive analysis is the market and the competition for profits
that the firms perform on a daily basis. In this analysis, the author uses Porter’s 5 Forces,
Ansoff’s Matrix, TOWS Analysis and the VRIO Framework to get the most detailed
knowledge possible from the market environment.
Considering the business model adopted by AMS, the competitive analysis is
performed to comprehend the competition of AMS, as well as the commercial viability of
Prophyl-ACT in the market. Therefore, it is important to provide a deep analysis on the
challenges that this commercialization will face in order to present it during the negotiation of
licensing the patent of the product to other pharmaceutical company.
7.1. Porter’s 5 Forces
This strategy model consists on performing a detailed analysis about the main five
forces that shape the competitive environment: bargaining power of buyers, bargaining power
of suppliers, threat of substitutes, threat of new entrants, threat of substitutes and competitive
rivalry within the environment. In this way, it is possible to evaluate the potential profitability
of the industry, which is a decisive factor on the construction of this business plan. Therefore,
this analysis will be made through a weighted average of the different criteria used to quantify
the different forces (Appendix, Table 27 – Porter’s 5 Forces).
Bargaining Power of Buyers
The bargaining power of buyers represents the power that the buyers have to stop
consuming a company’s product. In order to evaluate this power within the pharmaceutical
industry, and focusing in the disease of malaria, there are some important considerations to
do.
First of all, the market size for this specific therapeutics is relatively high. According
to Petersen & Schlagenhauf (2008), there were between 80 million to 90 million travellers, in
2008, to malaria endemic regions. Secondly, given that there are some alternatives in the
market and there is the possibility of stop taking the drugs, the client’s cost to change the
medicine are low, increasing the bargaining power of buyers. Other measure that shifts the
bargaining power of the buyers is the severity of the side effects that the consumer has after
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43
taking the medicines, preferring drugs with lower adverse effects to health. Additionally, it is
important to enhance the information availability, in the way that with the pre-travel
consultation, travellers are informed about the most adequate antimalarial to buy. After the
pre-travel consultation, people will make a decision about taking or not prophylaxis to avoid
the infection. As follows, since the customer takes the final decision, taking into account the
opinion of the doctor, the bargaining power of buyer is high (3.71). This situation happens
because this therapeutic is a prophylaxis to avoid the infection instead of a cure to this
infection and because there is an important percentage of the travellers that is willing to risk
and travel without prophylaxis.
Bargaining Power of Suppliers
To evaluate the bargaining power of suppliers, it is important to take into account
three variables: the size of AMS in the case of commercializing by itself the product, the
number of suppliers available in the market, and the probability of these suppliers combine
the prices in order to maximize their profit.
In this way, given that the company is small, the suppliers’ profit does not depend on
it, so that they are willing to start to combine prices in order to maximize their profit.
Moreover, the number of suppliers available is moderate, which does not benefit the
company. In this way, the dependence of AMS to its suppliers is very high so their bargaining
power is very high, with a global force of 4.33.
Threat of Substitutes
The existence of substitute products is other important fact to account on this analysis.
The substitutes already used in the market are methods to avoid the mosquito biting. In this
way, the efficacy of these products is limited and it is not the best way to avoid malaria
infection. Moreover, the number of substitutes that exist in the market is small, which makes
the threat of substitutes low, with a global force of 1.5.
Threat of New Entrants
New entrants are other force that shall be deeply analysed. Given the increase on the
awareness of the problem, there are more efforts to develop products to reduce the burden of
malaria. In this way, the incentives to R&D are high and there is an increasing number of
venture capitalists that are interested in biotechnology start-ups researching this topic.
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Yet, given the implications of new medicines in human population, this is a sector that
is highly regulated by the government institutions. Thus, the legal requirements needed to
fulfil in order to develop the new drugs are a high barrier to new entrants. Moreover, these
legal requirements cause high needs of capital to spend in R&D or legal issues, which
constitutes another important entry barrier. Additionally, the time to market period is more or
less 10 to 12 years, being half of the patent period. However, the increasing investment on
R&D in the area will bring to the market at least other competitor that may trouble the
commercialization of Prophyl-ACT. Therefore, the threat of a new entrant in the market is
moderately high, with a global force of 2.67 out of 5.
Competitive Rivalry
The last force that shifts the competitive environment of a company is the competition
level within the industry. In the case of Prophyl-ACT, the most important competitors are
Atovaquone/proguanil, also known as Malarone (brand name), and Mefloquine.
Side effects are an important factor when the customers decide which prophylactic
medicine they will use. In general, excluding Atovaquone/Proguanil, all the existing
medicines have severe side effects. In this way, Malarone has enjoyed a privileged position in
the market. Additionally, the parasite resistance to all these products is increasing, so they are
losing efficacy. Moreover, the price is other variable that influences the buying decision of the
travellers. Regarding the price, the most expensive is Malarone, but its patent protection has
expired recently. Following this, the competitive rivalry has a moderate global force of 2.5,
mainly due to the low price of the competitors whose patent expired.
Considering the analysis performed to each force of the model, there is evidence to say
that the industry being studied has a good potential to generate profits to the company given
that, in general, all these forces have a moderate or low impact on the company’s
performance.
7.2. Ansoff’s Matrix
The Ansoff’s Matrix helps the decision makers to understand what the adequate
strategy is relying on the competitive advantage of the company, by analysing the inherent
characteristics of the product and the needs of the target customers. In this way, there are four
different strategies to adopt: market penetration, market development, product development or
diversification, as the Figure 11 shows.
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Considering the characteristics of the market and target clients, it is recognizable that
there is an existing market need that is not satisfied by the existing antimalarial prophylactic
medicines. In this way, customers demand drugs with less severe side effects and with lower
parasite resistance.
In the other perspective, the product that AMS presents to the market is innovative, by
combining compounds that are already approved to human consumption and that have
prophylactic characteristics. Moreover, these products are known to have very low side
effects and low rate of habituation by the human body, and are easily available in the market.
In order to capture the value created by the commercialization of Prophyl-ACT, the
company that will commercialize the drug shall proceed to a premium price strategy, so that
seizing extra benefits this medicine brings compared with the other drugs, like the absence of
adverse effects. In this way, Malarone is currently the most expensive product in the market,
with a price of €32.17 in Portugal. Therefore, the price to end user of Prophyl-ACT shall be
higher than this.
7.3. TOWS Analysis
Although the SWOT Analysis gives an important analysis of the environment that
constraints the activity and performance of a company, it is, in a certain way, limited because
it does not indicates how to face the cons using the strongest points of both internal and
external environments of the company. Being said that, TOWS Analysis provides the answers
that shall be answered to those challenges, giving insightful ideas on how to face weaknesses
and threats by using strengths and opportunities. In this way, SO provides an idea of how to
use strengths to take advantage from opportunities, ST indicates the way to use strengths to
minimize the threats, WO concerns with the strategies to minimize weaknesses by enjoying
opportunities, and WT regards with strategies to minimize weaknesses and avoid threats.
(Appendix, Table 28 – TOWS Analysis)
Source: Adapted from I. Ansoff (1965) Corporate Strategy, Penguin, Harmondsworth (1968) toward a strategy of a
theory of the firm, McGraw-Hill, New York
Table 1 - Ansoff's Matrix
Existing New
ExistingMarket
Penetration
Product
Development
NewMarket
DevelopmentDiversification
Product
Client's
Need
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SO
Communicate the product to attract travellers that buy other prophylactics;
Communicate the product to travellers that do not buy the prophylactic;
Use the team’s knowledge to apply to research and development funds and get
financial assets to accomplish the plan;
Use the team’s knowledge to develop other solutions
Provide a simple communication to attract possible buyers to the patent.
ST
Development of a high performance product to facilitate the approvals on legal
procedures and clinical trials;
Maintain a simple structure to better cope with the uncertainty and keep the costs
under control;
Use of this technology in other ways, in the case of not getting the approval on clinical
trials;
Out-license, as a way to avoid the huge investments on further clinical trials and
commercialization;
Product performance and easy communication to raise funds to Clinical Trials Phase
I/II-A
WO
Use the market size and market growth as an argument to increase the selling price of
the patent;
Explore the lack of solutions to develop an important pipeline of investigation,
reducing the dependence of a single product;
WT
Reduce the time to market and avoid being overpassed by new competitors in the
market;
Getting approval on clinical trials in order to avoid more investments in R&D and
legal procedures;
Seize the worldwide effort to develop new antimalarial medicines to attract investment
and funding to reduce the expensive R&D activities.
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7.4. VRIO Framework
In a competitive environment, a company needs to have some specific resources or
capability that makes it different from the other competitors and attracts customers to the
company. In this way, VRIO Framework allows understanding the sources of competitive
advantage and how sustainable is that advantage. The following chart explains how VRIO
works:
In order to perform the analysis following this framework, first, it is relevant to
identify the resource or capability of AntiMalarial Solutions that is willing to provide
competitive advantage to the start-up. As follows, the company defines itself as being created
to develop innovative solutions to the market that can help fighting the malaria infection.
Prophyl-ACT results from this orientation of the company.
Considering what was said above, AMS has to identify the resources considered the
sources of competitive advantage. So, the core resources of the company are the highly
experienced human resources and their knowledge and technical competencies. These
resources have a crucial role on pursuing with the research and development of Prophyl-ACT
until the end of the first phase of clinical trials. After that, the company will base its activity
on these resources to start the R&D of new products, developing a strong pipeline of
investigation for the future.
Applying the VRIO Framework on these resources, the company may have a
sustainable competitive advantage. These resources are valuable given that they are
responsible for developing new medicines ensuring the company’s sustainability. AMS is able
to capture the value of these resources on the future negotiations of the patents. Moreover,
these resources are rare due to the work experience acquired. As follows, the researchers of
AMS are Ph.D Researchers with more than ten years of experience on malaria, with several
publications and presences in international events about malaria. Considering this, it is
difficult to a competitor to imitate this, due the scarcity of resources like that in the market.
Finally, the company is organized to capture value from these resources due to the
commercialization of the patents of the products developed. Therefore, AMS has a sustainable
competitive advantage that can use in the long run in order to achieve its objectives and
overcome the challenges of the external environment.
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8. Development Strategy
The development of AntiMalarial Solution’s Strategy will be designed taking into
account the characteristics of the product that will be proposed to the market as well as the
characteristics of the targeted market and its competition. In this way, Porter’s Generic
Strategies is a useful framework since it analysis which is the most adequate strategy to
follow.
Being said that, the adequate strategy to follow according the product under
development is a differentiation strategy given that the Prophyl-ACT has paramount
characteristics that other competitors do not have and there is a wide ineffectively fulfilled
market to serve.
Following this, it will be described the internal values and assets that can lead the
company to achieve success in the long run.
8.1. Vision, Mission and Corporate Values
Vision
The Vision of AntiMalarial Solutions is to be a world reference on fighting and
minimizing the burden of malaria.
Mission
Through focused research and development in fighting malaria disease, AMS intends
to provide innovative therapies to the market, offering better solutions to minimize the effects
and costs associated with malaria.
Corporate Values
AMS is a company created to develop innovative medicines focused on a specific
therapeutic. Along these line, the values that will guide the activities of AntiMalarial
Solutions will be:
Source: Adapted from Competitive Advantage: Creating and Sustaining Superior Performance; Michael Porter (1980)
Big Market Cost Leadership Diferentiation
Small Market Focus Strategy
Table 2 - Porter's Generic Strategies
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Social Responsibility – by promoting events and campaigns to help people that are
affected by malaria;
Innovation – developing new products imply thinking out of the box;
Sophistication – using the most adequate and ultimate technology and methods to
develop better products;
Proximity – establishing close relationships with all the stakeholders, in order to share
the value created with all of them in a fair way;
Equality – similarly with proximity, AMS aims to share the value created with their
shareholders and people struggled with the burden of malaria.
8.2. Critical Success Factors
Given that AMS follows a differentiation strategy, its focus will be on the continuous
improvements of the products and respective characteristics as well as developing new
products. Therefore, the core activities of this start-up will be R&D activities. In this way, the
Critical Success Factors to accomplish this plan will be mainly focused on R&D and they will
be the following:
Product developed achieves the expected performance;
Approval on Clinical Trials Phase I;
Start negotiations with other pharmaceutical companies;
Start R&D to other therapies;
Sell the industrial property to other pharmaceutical company.
8.3. Value Proposition
As a R&D company, AMS aims to create value in the first phase of a medicine’s life.
Thus AMS creates value to the society through intensive activities of R&D in order to
develop innovative technologies to solve health issues related with malaria. Given that AMS
is a company focused on technology development, the company will sell the rights of
commercialization to other companies, in order to get the investment back.
The value creation of AMS can be observed in Prophyl-ACT, which is a therapeutic
with unique characteristics. Therefore, this drug strongly attenuates the infection and reduces
the disease risks to human life. By not killing the parasite, this drug does not activate
mechanisms of natural selection, which implies a lower probability of parasite resistance in
the long-run.. Comparing with other prophylactic medicines, this drug has very low side
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effects to patients, which represents the most important differentiation factor and it is a good
example about what AMS wants to deliver to the society.
8.4. SMART Objectives
In order to follow a consistent path and measure the accomplishment of the plan, the
project shall have objectives to achieve. Yet, these objectives shall be SMART, or in other
words, specific, measurable, achievable, realistic and with a specific period of time to
accomplish it. Being said that, the SMART Objectives of AntiMalarial Solution’s business
plan are:
Raise investment of 1.000.000€ at the end of 2016 to start the Proof of Concept;
Recruit, in 2016, the R&D Team, the Personal Assistant;
Raise 400.000€ to start the Clinical Trials Phase I/II-A.
Finish the Proof of Concept in 2017 and start the Clinical Trials Phase I/II-A
New round of investment to face the financial needs in a value of 2.000.000€; in 2017;
Finish the Clinical Trials Phase I/II-A in 2019 and start to prepare the licensing
process;
Out-license the product to an established pharmaceutical company at the end of 2019,
receiving 6.000.000€ for the patent.
Although one of the SMART objectives is to out-license the product to other company
in 2019, it is important to continue the exercise of estimating the commercialization value of
Prophy-ACT, in order to present the value that the possible buyer will earn in the
commercialization of the drug and what is the net present value of it.
8.5. Resources, Capabilities and Strategic Competencies
Although AMS is in the beginning of its life, the company already has a sustainable
competitive advantage in the market. As follows, resources, capabilities and strategic
competencies are a pillar to the strategy of the company in the long run. The company shall
base its activities on that in order to overcome future challenges, such as the end of the patent
protection. Yet, in the beginning, the company shall assent its activities on the product.
Competitive Advantage based on Resources:
Innovative drug protected by a patent;
Technology as a mean to improve R&D;
Highly qualified human resources, mainly in R&D.
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Competitive Advantage based on Capabilities:
Expertise on R&D focused on developing new drugs focused on Malaria;
Adaptive structure of the company;
Advantage from using innovative technology in R&D and efficient methods;
Efficient structure that allows low fixed costs.
Competitive Advantage based on Strategic Competencies
Strategic thinking to establish the right path to a sustained growth;
HR Management focused on the employee, in order to optimize the workforce efforts;
Equality and fairness to give the right incentives to those who deserve it.
8.6. Competitive Strategy
The space of AMS in the marketplace is different from a typical pharmaceutical
company. Whereas those companies invest billion dollars on their activities from R&D to
marketing and market activities, AMS will only focus on the beginning of the process, being
specialized on R&D. This allows the company to be focused on the most indicated areas
according to its core capabilities, avoiding an expensive and ineffective supply chain to
commercialize the drug.
Being said that, the competitive strategy of the company will be based on the
continuous development of new patented drugs in order to make the company profitable.
Therefore, the company shall build an important network and visibility in the community
around the area of malaria, in order to increase the awareness of the big companies on its
patented drugs.
8.7. Growth Strategy
The growth strategy of AMS shall be based on the deep knowledge and experience of
its teams and the characteristics of the medicines and the diseases. Being said that, the drug
will invest on finding other types of solutions of antimalarial drugs, in order to answer to
other needs of the international community. In this way, an important market to target after
the travellers are those people who live in a daily contact with the Malaria, mainly directed to
pregnant women and children because these two groups cannot take antimalarial drugs.
Moreover, diseases like Leishmania and Trypanosomes since they have a similar mode
of action as malaria they also constitute a possible strategy to follow.
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8.8. Business Model
AntiMalarial Solutions have a common business model to a pharmaceutical start-up.
In this way, AMS is a company created to develop antimalarial drugs and deliver it to the
customers through licensing them to other companies that may commercialize those drugs.
The company is organized to create value on the beginning of a drug’s life. In this
way, the company’s structure is organized to on R&D activities.
Given that the company will license patented drugs most probably until the first phase
of clinical trials its clients are the pharmaceutical companies with capacity to further develop
the product and to bring it to the market. In this way, maintaining the highest visibility of the
company is paramount to improve the value of the patented drugs, so that the business model
can succeed.
The cost structure of the company will be very simple, due to its simple organizational
structure. As follows, the main costs will be the costs related with research and development
and will depend on the peace of the investigation. In this phase, the biggest cost the company
will have are the Clinical Trials Phase I/II-A, and the success on this phase will delineate the
success of the investigation. Regarding the personnel costs, all the workers will have a
constant salary and a percentage of the total value earned in the transaction of the patents.
With this practice, the company aims to motivate the workers to perform an effective and
efficient work, in order to develop a drug with high performance to sell the patent at the
highest possible value.
Following this line, the revenue stream of AMS will be based on its ability to generate
value from the license of its patents. In this way, the main source of revenues will be the
transaction of the patent. Anyhow the company will apply to any other funds raising money to
ensure its financial and economic viability like for instance the Bill and Melinda Gates
Foundation, which funds the development of anti-malarial drugs as referred before.
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9. Marketing
This section of the business plan will be composed by two different parts. The first one
corresponds to the marketing strategy of AMS and the second part will briefly describe a
possible marketing strategy that a potential buyer of the patent of Prophyl-ACT could adopt.
At this point, it shall be enhanced that this part only serves to understand the cost structure
during the commercialization phase, which will not be performed by AMS, being only a
theoretical exercise. However, without this it would not be possible to evaluate the economic
viability of the commercialization of the drug and, consequently, the economic viability of
AMS.
9.1. AMS Marketing Plan
As mentioned before in this business plan, the success of the company has a great
dependability on external entities. Firstly, the company will need to participate in some
rounds of investment in order to raise enough funds to start and maintain the business.
Additionally, there is a need of collecting knowledge about the last news and methods related
with malaria, in order to keep the company as an example of constant innovation. Lastly, due
to the out-licensing of the patent, it is important to the company to be in contact with
pharmaceutical companies to increase awareness on those companies that will probably buy
the patent. During this process, the CEO and the Marketing Manager will have an important
role to perform.
Considering what was said above, it can be considered this part as a communication
plan instead of a marketing plan, given that the company will not commercialize any product
or service. Instead, the company will only sell some assets, in this case patents. Thus, there
will not be a segmentation, targeting and positioning, as well as marketing mix, due to the
absence of constant cash flows entering the company.
Yet, it is important to specify which will be the strategy of the company at this respect.
Therefore, the company, through its CEO and Marketing Manager, will be present on
international conferences and other events related with malaria. Additionally, the company
shall be present in events related with entrepreneurship and value creation in start-ups, given
that there are several investors that go to these events. Finally, the company shall be in other
pharmaceutical industry events, in order to establish some contacts with pharmaceutical
companies.
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
54
9.2. Marketing plan to commercialization
This exercise is performed to have a more accurate cost estimation to present to the
buyer of the patent. Thus, the following assumption was made: a company with a well-
established sales channel will commercialized the Prophyl-ACT so that having the capacity to
sell the product in different markets right from the beginning. Therefore, the company will
sell the drug on European countries, starting with Portugal, Spain, France and UK, and
expanding to other countries in the following years. The company sells the prophylaxis in
Europe because this drug is indicated to people that go to endemic malaria countries for short
periods. As follows, it will be explained the marketing mix of the commercialization
Product
The product is composed by a tablet of 16 pills that have prophylactic effects. This
will allow the body to trick the parasite by sending messages about the low level of food that
the parasite supposedly had in the environment. As a consequence, the parasite stops
reproducing and fights for surviving.
This drug is composed by already approved compounds for human utilization.
Therefore, these compounds are known by having low adverse effects to humans and absence
of habituation to them of the body, allowing people to stop consuming quickly.
Place
Prophyl-ACT will be available in pharmacy shops in European countries. People may
have access to the medicine there and shall start the treatment two days before the travel.
Promotion
The communication of the drug shall be a combination of a pull and a push strategy. In
this way, the company shall advertise in travel magazines or other related newspapers and, at
the same time, sales representatives shall maintain a strict relationship with pre-travel doctors
because they have an important influence on the final choice of the customer.
Price
The price practiced in the sale of Prophyl-ACT shall give the information for
customers that the company is providing a premium product. In this way, the company shall
practice a higher price than the price of the best competitor product, Malarone. Therefore, the
final price to customers shall be around €35.
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
55
10. Implementation of the Plan
This section will comprise all the resources that the company will need whilst
developing the drug. Thus, there will be a description about the activities to perform during
the time-to-market period, the materials and equipment needed to accomplish those activities
and the minimum requisites to validate these activities, in order to accomplish the plan.
10.1. Time-to-market
The time-to-market period is directly related with the duration of the R&D phase of a
product. As follows, all the legal requisites that a prototype of a drug shall respect are
variables that greatly increase this period.
Concerning with the Clinical Trials, there are four phases of submission of a drug that
must be approved. However, given that the raw materials are already used and approved in
human beings, it is possible to aggregate the clinical trials in three phases – Phase I/II-A;
Phase II-B/III and Phase IV. This will shorten the time-to-market period and will decrease the
risk subjacent to this project.
Considering what was said above and that the proof of concept will be finished in
2017, it is planned that the company will sell the patent in 2019, after Phase I/II-A, and it is
expected that it will be launched in the market in 2023.
10.2. Material Needed
The company will need some materials that will be included in the account “Supplies
and Service Expenses”. In this account, it will be included different materials used in the
company’s activities as well as other services contracted.
Concerning the services, the company will need to outsource lawyer services in the
beginning in order to fulfil all the legal requirements to approve in the patent acquisition
process. Moreover, the company shall hire an accounting team to prepare the financial
statements, a communication plan with mobile phones communication and internet to support
CT Phase I/II-A
R&D for Other Products
Out-Licensing Process
2019201820172016
Proof of Concept
Table 3 - Project's Flowchart
Source: Author
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
56
its the daily activities. Furthermore, given that the company will not purchase its own
building, it will pay a monthly rent that includes the space based on square meters and the
expenditure of water and electricity. Finally, the company must contract insurance services
for the vehicle and to other equipment.
Regarding with the materials needed, the company will consume the compounds used
in the R&D process. However, these materials can be considered as investment in R&D and,
therefore can be depreciated. The company predicts to spend 80.000€ per year in R&D.
Moreover, there are some office consumables that are important to use, such as cartridges,
paper, pens and other office materials.
10.3. Equipment Needed
The company has to invest in some equipment needed to the R&D Phase and to the
management activities in the upcoming years of the project.
Regarding the laboratory equipment, the company will need a Flow Cytometer, one
incubator, one fridge, one freezer and pipettes, and the investment in these materials is
expected to be 64.551€.
Additionally, the company has to perform the support activities and provide to its
management staff the basic equipment. Therefore, the company will purchase one printing
machine, two mobile phones, two phones and furniture in an investment of 992.46€ in the
first two years. Moreover, the company will need a vehicle to the CEO in order to provide
transportation during his short business trips. The vehicle is expected to cost 25.000€
10.4. Implementation Requisites
In order to ensure that the plan will be accomplished and the industrial property of
Prophyl-ACT will be sold in 2019, there are some implementation requisites to respect.
The first step to start with the plan is to raise enough investment so that the company
as capacity to purchase the equipment needed. In this way, the company will need to Fixed
Tangible Assets, such as Laboratory equipment of 67.551€, Administrative equipment of
822.23€ and transportation equipment of 25.000€.
Regarding the industrial property that gives protection to the technology, this implies a
huge investment to the company. First of all, AMS must contract lawyer services to help in
the legal issues implied during the process. Additionally, after the patent approval, the
company has to pay an annuity of 10.000€ in order to maintain the patent protection.
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
57
Considering the development of the drug, there are two steps that must be completed.
The first one is the Proof of Concept that may be finished in the end of 2017 and it is
estimated a cost of 300.000€ to pay in the first year. Afterwards, the Clinical Trials Phase I/II-
A is the last step before the sale of the patent. This Clinical Trial has a cost estimated in
2.000.000€ to pay in 2018 and may be raised in bank loans to pay after the sale.
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
58
11. Financial Forecasts
The Financial Forecasts are one of the most important sections in this business plan
given that it will be possible to study the economic viability of the presented project.
Following this, the author will provide the explanation of the assumptions that based the
forecasting process. Afterwards, it will be presented the financial forecasts of AMS until the
moment when the patent is sold to other bigger pharmaceutical company. Finally, the author
has to perform the forecasts during the commercialization period, in order to estimate the
value of this activity.
11.1. Assumptions
The exercise of financial forecasting is based on some important assumptions that
characterize the external environment of the company. In this way, the author uses
information from official governmental and public sources, in order to use more accurate
values that will have a great impact on the company’s performance. To better understand the
financial forecasts performed there are some assumptions to be acknowledged:
The financial forecasts of AMS will be calculated until the patent sale, in 2019,
and the financial statements of the commercialization will start on 2016 and finish
5 years after the market entry, in 2027.
The predicted inflation rates will be 1.49% in 2017, 1.64% in 2018 and 1.76% in
2019 (IMF, 2016). After this period, the author assumes an inflation rate of 2.0%
in the 2020-2027 period.
The author defined an increasing rate in wages above the inflation rate. Therefore,
the wages increasing rate will be 2% between 2017-2019 and 2.5% between 2020-
2027.
The interest rate of the Treasury bill (10 years period) of the Portuguese
Government is 2.84%.
The VAT rate applied both in purchases of raw materials and supplies and service
expenses, and in the sales is considered 23%.
The account receivables period and account payables period are both 30 days.
The Average Inventory Period is 30 days, as well as the period of paying or
receiving VAT, Social Security Taxes or the Tax Withholding Period.
The company has to pay Average Tax Rate on Profits of 19% and a Balance Local
State Tax of 1.5%, which equals to 20.5% of Taxes on Profits;
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
59
The company pays 23.75% of the employee wage to social security whilst the
employee pays 11%, which is withheld by the company.
Each employee pays an Average Income Tax of 14.5% over his salary, which is
withheld by the company;
The company pays 1% over each employee wage as Accidents Insurance;
To each worker, the company pays a food allowance of 4.27€ per day.
The company will distribute 2% of the patent sale by its workers, as variable
salary. This will happen in 2019.
AMS is funded with 100% of equity and 0% of debt, and it will use both debt and
equity during the development phase to finance their activities.
Pharmaceutical industry is characterized by a Cost of Equity of 8.37%, a Cost of
Debt of 4.52%, a β of 1.02. The Weighted Average Cost of Capital is 7.72%.
The author considered a 3% Interest Rate in short run financing and 4% in long
run bank loans.
The Continuation Value of the project is not calculated in these financial forecasts
given that the patent will be sold in 2019, and it is not certain that the company
will be capable to develop new drugs.
11.2. Financial Forecasts for AntiMalarial Solutions
Cost Projections
Given that the AMS will not commercialize any product, the company will not have
any sales projection. Therefore, the company will not have any Cost of Goods Sold, meaning
that the company shall only forecast the Supplies and Service Expenses.
2016 2017 2018 2019
Accumulated Inflation Factor 1,000 1,016 1,036 1,057
Supplies and Services Expenses Unit Cost 0 1 2 3
Office Rent 14 400,00 € 14 630,40 € 14 923,01 € 15 221,47 €
Communication Plan 300,00 € 304,80 € 310,90 € 317,11 €
Diesel 3 125,00 € 3 125,00 € 3 175,00 € 3 238,50 € 3 303,27 €
Car insurance 600,00 € 600,00 € 609,60 € 621,79 € 634,23 €
Lawyers Fees 8 000,00 € 8 128,00 €
Accounting Team 7 000,00 € 7 112,00 € 7 254,24 € 7 399,32 €
Plain Tickets 10 000,00 € 10 160,00 € 10 363,20 € 10 570,46 €
Hotels 20 000,00 € 20 320,00 € 20 726,40 € 21 140,93 €
Representation Meals 3 000,00 € 3 048,00 € 3 108,96 € 3 171,14 €
Conferences 10 000,00 € 10 160,00 € 10 363,20 € 10 570,46 €
Office Consumables 5 000,00 € 5 080,00 € 5 181,60 € 5 285,23 €
IP Annuities 10 000,00 € 10 000,00 € 10 000,00 € 10 000,00 €
91 425,00 € 92 727,80 € 86 091,80 € 87 613,63 € Total SSE Purchases
Costs of Goods Sold and Supplies and Services Expenses - Current Prices
Table 4 - COGS and Supplies and Service Expenses, AMS
Source: Author
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
60
Investment in Net Working Capital
Although that these values may look strange at a first glance, there is a reason why the
company has only in one year needs of investment in net working capital. Given that the
company does not have commercial activity, the accounts of stocks and Account Receivables
are zero and the value that the company will receive in VAT is low. However, this value
increases in 2018 due to the high investments on R&D that the company has to do. This
means that the company do not need to allocate financial resources to ensure the current
activities of the company.
Cash Flow Analysis
Given that the company does not have to invest in NWC, except in 2018, this will free
funds and improve the Cash Flows of the project. However, there are some huge investments,
Period 2016 2017 2018 2019
FIRM'S NEEDS
Account's Receivables 30
Stocks 30
Vat to Receive 30 9 164,68 € 4 442,21 € 44 528,43 € - €
TOTAL NEEDS OF THE FIRM 9 164,68 € 4 442,21 € 44 528,43 € - €
FIRM'S RESOURCES
Account payables 30 7 514,38 € 7 621,46 € 7 076,04 € 7 201,12 €
GOPE (SS) 30 4 569,60 € 5 567,20 € 5 706,38 € 9 446,78 €
GOPE (Income Taxes) 30 1 906,74 € 2 323,01 € 2 381,08 € 3 941,82 €
TOTAL RESOURCES OF THE FIRM 13 990,73 € 15 511,67 € 15 163,50 € 20 589,72 €
NEEDS OF NET WORKING CAPITAL 4 826,05 €- 11 069,46 €- 29 364,93 € 20 589,72 €-
INVESTMENT IN NET WORKING CAPITAL 4 826,05 €- 6 243,41 €- 40 434,39 € 49 954,65 €-
NET WORKING CAPITAL - CURRENT PRICES, Y0
2016 2017 2018 2019
FINANCIAL RESOURCES
NOPAT 296 180,32 €- 342 089,12 €- 341 532,14 €- 4 895 839,57 €
Uninvestment in NWC 4 826,05 € 6 243,41 € - € 49 954,65 €
TOTAL FINANCIAL RESOURCES 291 354,27 €- 335 845,70 €- 341 532,14 €- 4 945 794,22 €
FINANCIAL NEEDS
Investment in Fixed Assets 393 373,23 € 142 258,77 € 2 269 397,59 € - €
Investment in NWC - € - € 40 434,39 € - €
TOTAL FINANCIAL NEEDS 393 373,23 € 142 258,77 € 2 309 831,98 € - €
CASH FLOW OF THE PROJECT 684 727,50 €- 478 104,47 €- 2 651 364,12 €- 4 945 794,22 €
ACCUMULATED CASH FLOW 684 727,50 €- 1 162 831,98 €- 3 814 196,10 €- 1 131 598,12 €
CASH FLOW STATEMENT - CURRENT PRICES
Source: Author
Source: Author
Table 5 - Net Working Capital, AMS
Table 6 - Cash Flow Statement, AMS
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
61
mainly in 2018, that will reduce the Cash Flows. Therefore, the activity of the company will
only have positive cash flows in 2019, after the patent sale to other pharmaceutical company.
Economic Valuation of the Project
The method used in the economic valuation of the project allows the investors to
decide whereas a project is worth or not of investment. In this way, the Net Present Value,
which consists on the cumulative value of the discounted cash flows of the project, is a
fundamental criteria to present to possible investors. Considered the value presented of
€490267.18, this project is worth of investment and shall continue to the implementation
phase.
Provisional Income Statement
PROJECT'S EVALUATION 0 1 2 3
Cash Flow of the Project 684 727,50 €- 478 104,47 €- 2 651 364,12 €- 4 945 794,22 €
Accumulated Inflation Factor 1,0000 1,0149 1,0315 1,0497
Deflated Cash Flow 684 727,50 €- 471 085,30 €- 2 570 286,09 €- 4 711 628,45 €
WACC 8,35% 6,76% 7,50% 6,47%
Discount Factor 1,0000 1,0676 1,1476 1,2219
Discounted Cash Flow 684 727,50 €- 441 267,46 €- 2 239 664,86 €- 3 855 927,01 €
Accumulated Discounted Cash Flow 684 727,50 €- 1 125 994,97 €- 3 365 659,83 €- 490 267,18 €
Net Present Value of the Project 490 267,18 €
Internal Rate of Return 16,43%
Payback Period of Project 3,87
2016 2017 2018 2019
Sales 6 298 197,24 €
Costs of Goods Sold
Gross Margin - € - € - € 6 298 197,24 €
External Services and Supplies 91 425,00 € 92 727,80 € 86 091,80 € 87 613,63 €
Personnel Costs 204 755,32 € 249 361,32 € 255 440,35 € 418 811,38 €
EBITDA 296 180,32 €- 342 089,12 €- 341 532,14 €- 5 791 772,24 €
0,92 €
Depreciations 31 051,50 € 61 192,05 € 174 661,93 € 174 661,93 €
EARNINGS BEFORE TAXES 327 231,83 €- 403 281,17 €- 516 194,07 €- 5 617 110,31 €
Deductible Losses - € 327 231,83 €- 730 512,99 €- 1 246 707,07 €-
Taxable Amount (Matéria Colectável) 327 231,83 €- 730 512,99 €- 1 246 707,07 €- 4 370 403,24 €
Taxes on Profits - € - € - € 895 932,66 €
NET INCOME 327 231,83 €- 403 281,17 €- 516 194,07 €- 4 721 177,64 €
NOPAT 296 180,32 €- 342 089,12 €- 341 532,14 €- 4 895 839,57 €
INCOME STATEMENT - CURRENT PRICES
Table 7 - Project´s Evaluation, AMS
Source: Author
Table 8 - Income Statement, AMS
Source: Author
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
62
In this financial statement, it is important to highlight and explain the variance
between the sales of 2018 and the sales of 2019. In the last year of this project, the
6298197.24€ in sales come from the sale of the patent, which is 6000000 at prices of 2016.
Financial Plan
2016 2017 2018 2019
FINANCIAL RESOURCES
EBITDA 296 180,32 €- 342 089,12 €- 341 532,14 €- 5 791 772,24 €
Uninvestment in NWC 4 826,05 € 6 243,41 € - € 49 954,65 €
Shared Capital 1 000 000,00 € - € - € - €
Other Equity Instruments - € 412 617,74 € 2 063 088,72 € 2 475 706,46 €-
Financial Aplication Recovery - € - € 242 164,31 € - €
Return of Financial Apllications - € - € 3 632,46 € - €
TOTAL FINANCIAL RESOURCES 708 645,73 € 76 772,04 € 1 967 353,35 € 3 366 020,42 €
FINANCIAL NEEDS
Investment in Fixed Assets 393 373,23 € 142 258,77 € 2 269 397,59 € - €
Investment in NWC - € - € 40 434,39 € - €
Payout - € - € - € - €
GOPE - Taxes on Profits - € - € - € - €
Reimbursment of Short-run Financial Applications - € - € - € 353 276,15 €
Taxes on Profits of Financial Applications - € - € 744,66 € - €
TOTAL FINANCIAL NEEDS 393 373,23 € 142 258,77 € 2 310 576,63 € 353 276,15 €
TARGETED VALUE 30 315 272,50 € 7 621,46 € 7 076,04 € 7 201,12 €
VALUE TO FINANCE - € - € 342 677,86 € - €
VALUE TO APPLY - € 242 164,31 € - € 3 012 619,19 €
Short-Run Financing - € - € 353 276,15 € - €
Interests of Short-Run Financing - € - € 10 598,28 € - €
CASH AND EQUIVALENTS 315 272,50 € 307 651,03 €- 545,42 €- 125,08 €
CUMULATIVE CASH 315 272,50 € 7 621,46 € 7 076,04 € 7 201,12 €
FINANCIAL PLAN - CURRENT PRICES
Source: Author
Table 9 - Financial Plan, AMS
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
63
Provisional Balance Sheet
Ratios
Financial Ratios give important information about the performance of the company. In
this situation, the company only will generate profits in 2019 because it is the year when the
Table 10 - Balance Sheet, AMS
Source: Author
2016 2017 2018 2019
ASSETS
Non-current Assets
Intangible Assets
R&D Expenses 285 000,00 € 324 130,71 € 2 437 997,13 € 2 282 465,95 €
Patent - € 57 849,30 € 54 804,60 € 51 759,90 €
Sub-Total 285 000,00 € 381 980,01 € 2 492 801,73 € 2 334 225,85 €
Tangible Assets
Transportation Equipment 18 750,00 € 12 500,00 € 6 250,00 € - €
Laboratory Equipment 57 904,72 € 48 258,43 € 38 612,15 € 28 965,87 €
Administrative Equipment 667,01 € 650,00 € 460,23 € 270,45 €
Sub-Total 77 321,73 € 61 408,44 € 45 322,38 € 29 236,32 €
Current Assets
Inventory - € - € - € - €
Account Receivables - € - € - € - €
GOPE 9 164,68 € 4 442,21 € 44 528,43 € - €
Financial applications - € 242 164,31 € - € 3 012 619,19 €
Cash and Equivalents 315 272,50 € 7 621,46 € 7 076,04 € 7 201,12 €
Sub-Total 324 437,17 € 254 227,98 € 51 604,47 € 3 019 820,31 €
TOTAL DAS ASSETS 686 758,90 € 697 616,42 € 2 589 728,57 € 5 383 282,49 €
EQUITY
Shared Capital 1 000 000,00 € 1 000 000,00 € 1 000 000,00 € 1 000 000,00 €
Other Equity Instruments - € 412 617,74 € 2 475 706,46 € - €
Reserves - € - € - € 50 000,00 €
Reserves and Retained Earnings - € 327 231,83 €- 730 512,99 €- 1 254 417,54 €-
Retained Earnings 327 231,83 €- 403 281,17 €- 523 904,55 €- 2 938 883,92 €
Payout - € - € - € 1 734 466,37 €
TOTAL EQUITY 672 768,17 € 682 104,75 € 2 221 288,92 € 4 468 932,75 €
LIABILITIES
Long Run Liabilities
Bank Loans - € - € - € - €
Sub-Total - € - € - € - €
Short Run Liabilities
Account Payables 7 514,38 € 7 621,46 € 7 076,04 € 7 201,12 €
GOPE 6 476,34 € 7 890,21 € 8 087,46 € 13 388,60 €
Taxes on Profits - € - € - € 893 760,02 €
Bank Loans
Bank Loans in Euros - € - € - € - €
Short-Run Financing - € - € 353 276,15 € - €
Sub-Total 13 990,73 € 15 511,67 € 368 439,65 € 914 349,74 €
TOTAL LIABILITIES 13 990,73 € 15 511,67 € 368 439,65 € 914 349,74 €
TOTAL EQUITY AND LIABILITES 686 758,90 € 697 616,42 € 2 589 728,57 € 5 383 282,49 €
BALANCE SHEET - CURRENT PRICES
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
64
patent will be sold. Therefore, the importance of this year in all the company’s activity will be
crucial to understand if the project being developed is viable or not. In this way, the following
ratios will quantify the situation of the company after licensing the patent.
The economic ratios offer an idea about the economic performance of the business and
the viability of the project. In this way, ROI of 88% indicates that each euro invested in this
project has a return of 0.88€ to the investors. Considering the 104% of ROA, each euro hold
in the assets of the company generate 1.04€ as turnover. Finally, each euro invested in the
company by shareholders have a return of 1.06€ in the end of 2019. These ratios were only
calculated in 2019 given that it is the only year when the company generates profit.
The financial ratios provide information about the financial health of the company. In
this way, the Equity Ratio, that relates the equity with the total assets, gives an idea about how
leveraged a company is. In this way, 83% of the assets are financed by equity, meaning that
the company has a low dependence of bank loans and other debt instruments. Regarding the
Debt-to-Equity Ratio, this indicates again the financial leverage of the company. In this case,
the company as five times more debt than equity, meaning that AMS is in a healthy situation.
Finally, the liquidity ratio reveals the capacity of the company to pay its liabilities.
Focusing in the Current Ratio, that relates the current assets with the current liabilities, AMS
has three times more current assets than current liabilities, meaning that the company has the
capacity to meet all the short-run liabilities with the current assets.
Economic Ratios 2019
Return On Investment (ROI) 88%
Return on Assets (ROA) 104%
Return on Equity (ROE) 106%
Financial Ratios 2019
Equity Ratio 83%
Debt-to-Equity Ratio 20%
Liquidity Ratios 2019
Current Ratios 330%
Source: Author
Table 12 - Financial Ratios
Source: Author
Source: Author
Table 11 - Economic Ratios, AMS
Table 13 - Liquidity Ratio, AMS
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
65
11.3. Financial Forecasts for the commercialization
This section is important in the current business plan because it will provide information about the product performance during the
commercialization phase. In this way, the author will disclose information about the viability of this product, in order to give justified arguments
during the negotiations with the buyer of the patent.
Cost Projection
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Costs of Goods Sold Period 0 1 2 3 4 5 6 7 8 9 10 11
Accumulated Inflation Factor 1,000 1,016 1,036 1,057 1,078 1,100 1,122 1,144 1,167 1,190 1,214 1,238
Quantity Sold 0 0 0 0 0 0 0 937495 1239092 1417140 1571204 1802988
Unit COGS 9,85€ 10,01€ 10,21€ 10,41€ 10,62€ 10,83€ 11,05€ 11,27€ 11,49€ 11,72€ 11,96€ 12,20€
COGS -€ -€ -€ -€ -€ -€ -€ 12 088 427,21€ 16 622 821,30€ 19 779 453,28€ 22 815 734,07€ 27 239 244,00€
Final Inventory 0 -€ -€ -€ -€ -€ -€ -€ 1 136 823,20€ 1 594 512,90€ 1 935 253,03€ 2 276 974,10€ 2 772 802,05€
Initial Inventory -€ -€ -€ -€ -€ -€ -€ -€ 1 136 823,20€ 1 594 512,90€ 1 935 253,03€ 2 276 974,10€
Purchase of COGS -€ -€ -€ -€ -€ -€ -€ 13 225 250,41€ 17 080 511,00€ 20 120 193,41€ 23 157 455,14€ 27 735 071,95€
Supplies and Service Expenses Unit Cost 0 1 2 3 4 5 6 7 8 9 10 11
Office Rent 25 000,00€ 25 000,00€ 25 400,00€ 25 908,00€ 26 426,16€ 26 954,68€ 27 493,78€ 28 043,65€ 28 604,53€ 29 176,62€ 29 760,15€ 30 355,35€ 30 962,46€
Communication Plan 700,00€ 700,00€ 711,20€ 725,42€ 739,93€ 754,73€ 769,83€ 785,22€ 800,93€ 816,95€ 833,28€ 849,95€ 866,95€
Diesel 4 000,00€ 4 000,00€ 4 064,00€ 4 145,28€ 4 228,19€ 4 312,75€ 4 399,00€ 4 486,98€ 4 576,72€ 4 668,26€ 4 761,62€ 4 856,86€ 4 953,99€
Car insurance 600,00€ 600,00€ 1 219,20€ 1 243,58€ 1 268,46€ 1 293,82€ 1 319,70€ 2 019,14€ 2 746,03€ 2 800,96€ 2 856,97€ 2 914,11€ 2 972,40€
Lawyers Fees 8 000,00€ 8 000,00€ -€ -€ -€ -€ -€ -€ -€ -€ -€ -€
Accounting Team 7 000,00€ 7 112,00€ 7 254,24€ 7 399,32€ 7 547,31€ 7 698,26€ 7 852,22€ 8 009,27€ 8 169,45€ 8 332,84€ 8 499,50€ 8 669,49€
Plain Tickets 12 000,00€ 12 000,00€ 12 192,00€ 12 435,84€ 12 684,56€ 12 938,25€ 13 197,01€ 13 460,95€ 13 730,17€ 14 004,78€ 14 284,87€ 14 570,57€ 14 861,98€
Hotels 20 000,00€ 20 000,00€ 20 320,00€ 20 726,40€ 21 140,93€ 21 563,75€ 21 995,02€ 22 434,92€ 45 767,24€ 46 682,59€ 47 616,24€ 48 568,56€ 49 539,93€
Representation Meals 3 000,00€ 3 000,00€ 3 048,00€ 3 108,96€ 3 171,14€ 3 234,56€ 3 299,25€ 3 365,24€ 3 432,54€ 3 501,19€ 3 571,22€ 3 642,64€ 3 715,49€
Conferences 10 000,00€ 10 000,00€ 10 160,00€ 10 363,20€ 10 570,46€ 10 781,87€ 10 997,51€ 11 217,46€ 11 441,81€ 11 670,65€ 11 904,06€ 12 142,14€ 12 384,98€
Office Consumables 5 000,00€ 5 000,00€ 5 080,00€ 5 181,60€ 5 285,23€ 5 390,94€ 5 498,76€ 5 608,73€ 5 720,91€ 5 835,32€ 5 952,03€ 6 071,07€ 6 192,49€
IP Annuities 10 000,00€ 10 000,00€ 10 000,00€ 10 000,00€ 10 000,00€ 10 000,00€ 10 000,00€ 10 000,00€ 10 000,00€ 10 000,00€ 10 000,00€ 10 000,00€ 10 000,00€
Total SSE Purchases 105 300,00€ 107 306,40€ 101 092,53€ 102 914,38€ 104 772,67€ 106 668,12€ 109 274,53€ 134 830,15€ 137 326,75€ 139 873,29€ 142 470,75€ 145 120,17€
Total Purchases (SSE + COGS) 105 300,00€ 107 306,40€ 101 092,53€ 102 914,38€ 104 772,67€ 106 668,12€ 109 274,53€ 13 360 080,56€ 17 217 837,75€ 20 260 066,70€ 23 299 925,89€ 27 880 192,11€
Costs of Goods Sold and Supplies and Service Expenses - Current Prices
Table 14 - COGS and Supplies and Service Expenses, Commercialization
Source: Author
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
66
Sales Projection
The forecasting of sales was based on the number of cases of imported malaria in European Union. The focus was EU due to the similar
legislations between countries. The countries where the product will be sold were chosen according the number of cases of malaria per capita,
excluding Portugal. Those countries where the product will be sold are Portugal, Spain, France and United Kingdom, in 2023, Germany and
Italy, in 2024, and Belgium and Netherlands in 2025. It was considered a penetration rate of 4.2% based on the great performance of Harvoni, a
recent drug introduced by Gilead Sciences directed to treat Hepatitis C.
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Accumulated Inflation Factor 1,0000 1,0160 1,0363 1,0570 1,0782 1,0998 1,1217 1,1442 1,1671 1,1904 1,2142 1,2385
Prophyl-ACT Sold 1 968 741 2 631 629 3 089 943 3 576 991 4 347 852
Unit Selling Price 21,89 €
Total Revenues - € - € - € - € - € - € - € 49 309 328,22 € 67 230 344,31 € 80 517 690,91 € 95 073 364,41 € 117 873 434,95 €
Account Receivables - € - € - € - € - € - € - € 4 109 110,69 € 5 602 528,69 € 6 709 807,58 € 7 922 780,37 € 9 822 786,25 €
Growth Rate 36% 20% 18% 24%
REVENUES - CURRENT PRICES
Table 15 - Total Revenues, Commercialization
Source: Author
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
67
Investment in Net Working Capital
The company only have to invest in NWC after entering in the market. This is due to the big difference between the amount in account
receivables and account payables. The impact of the values to pay or receive from the Government is insignificant after the launch of drug in the
market.
Cash Flow Analysis
Prazo 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
FIRM'S NEEDS
Account's Receivables 30 - € - € - € - € - € - € - € 4 109 110,69 € 5 602 528,69 € 6 709 807,58 € 7 922 780,37 € 9 822 786,25 €
Stocks 30 - € - € - € - € - € - € - € 1 136 823,20 € 1 594 512,90 € 1 935 253,03 € 2 276 974,10 € 2 772 802,05 €
Vat to Receive 30 3 755,74 € 2 511,97 € 119 458,17 € 1 945,50 € 165 547,56 € 2 550,75 € 2 602,59 € - € - € - € - € - €
TOTAL NEEDS OF THE FIRM 3 755,74 € 2 511,97 € 119 458,17 € 1 945,50 € 165 547,56 € 2 550,75 € 2 602,59 € 5 245 933,89 € 7 197 041,59 € 8 645 060,60 € 10 199 754,47 € 12 595 588,29 €
FIRM'S RESOURCES
Account payables 30 8 654,79 € 8 942,20 € 8 424,38 € 8 576,20 € 8 731,06 € 8 889,01 € 9 106,21 € 1 113 340,05 € 1 434 819,81 € 1 688 338,89 € 1 941 660,49 € 2 323 349,34 €
GOPE (SS) 30 4 569,60 € 5 567,20 € 6 390,39 € 6 550,15 € 6 713,90 € 6 881,75 € 8 306,52 € 43 567,97 € 57 757,35 € 68 532,62 € 77 523,45 € 91 244,03 €
GOPE (Income Taxes) 30 1 906,74 € 2 323,01 € 2 666,49 € 2 733,15 € 2 801,48 € 2 871,52 € 3 466,03 € 18 179,44 € 24 100,19 € 28 596,35 € 32 347,91 € 38 073,05 €
TOTAL RESOURCES OF THE FIRM 15 131,14 € 16 832,41 € 17 481,26 € 17 859,50 € 18 246,44 € 18 642,28 € 20 878,76 € 1 175 087,46 € 1 516 677,36 € 1 785 467,86 € 2 051 531,86 € 2 452 666,42 €
NEEDS OF NET WORKING CAPITAL 11 375,40 €- 14 320,44 €- 101 976,91 € 15 913,99 €- 147 301,12 € 16 091,53 €- 18 276,17 €- 4 070 846,43 € 5 680 364,24 € 6 859 592,74 € 8 148 222,61 € 10 142 921,87 €
INVESTMENT IN NET WORKING CAPITAL 11 375,40 €- 2 945,05 €- 116 297,36 € 117 890,91 €- 163 215,11 € 163 392,65 €- 2 184,64 €- 4 089 122,59 € 1 609 517,81 € 1 179 228,51 € 1 288 629,87 € 1 994 699,26 €
NET WORKING CAPITAL - CURRENT PRICES
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
FINANCIAL RESOURCES
NOPAT 310 055,32 €- 356 667,72 €- 387 441,75 €- 396 241,50 €- 405 252,13 €- 414 478,74 €- 480 348,77 €- 26 974 853,20 € 37 903 213,49 € 45 672 408,96 € 54 515 406,75 € 68 522 258,17 €
Uninvestment in NWC 11 375,40 € 2 945,05 € - € 117 890,91 € - € 163 392,65 € 2 184,64 € - € - € - € - € - €
TOTAL FINANCIAL RESOURCES 298 679,93 €- 353 722,67 €- 387 441,75 €- 278 350,59 €- 405 252,13 €- 251 086,09 €- 478 164,13 €- 26 974 853,20 € 37 903 213,49 € 45 672 408,96 € 54 515 406,75 € 68 522 258,17 €
FINANCIAL NEEDS
Investment in Fixed Assets 93 373,23 € 25 572,95 € 6 218 071,57 € - € 8 652 453,31 € 28 262,76 € 28 398,67 € 106 731,84 € 29 661,55 € 30 766,62 € 30 562,05 € 31 324,74 €
Investment in NWC - € - € 116 297,36 € - € 163 215,11 € - € - € 4 089 122,59 € 1 609 517,81 € 1 179 228,51 € 1 288 629,87 € 1 994 699,26 €
TOTAL FINANCIAL NEEDS 93 373,23 € 25 572,95 € 6 334 368,93 € - € 8 815 668,42 € 28 262,76 € 28 398,67 € 4 195 854,43 € 1 639 179,36 € 1 209 995,13 € 1 319 191,91 € 2 026 024,00 €
CASH FLOW OF THE PROJECT 392 053,16 €- 379 295,62 €- 6 721 810,68 €- 278 350,59 €- 9 220 920,55 €- 279 348,84 €- 506 562,80 €- 22 778 998,77 € 36 264 034,13 € 44 462 413,83 € 53 196 214,83 € 66 496 234,17 €
ACCUMULATED CASH FLOW 392 053,16 €- 379 295,62 €- 6 721 810,68 €- 278 350,59 €- 9 220 920,55 €- 279 348,84 €- 506 562,80 €- 22 778 998,77 € 36 264 034,13 € 44 462 413,83 € 53 196 214,83 € 66 496 234,17 €
CASH-FLOW STATEMENT - CURRENT PRICES
Table 16 - Net Working Capital, Commercialization
Source: Author
Table 17 - Cash Flow Statement, Commercialization
Source: Author
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
68
In this topic, it is important to enhance the impact of sales in the Cash Flows of the company. In this way, the first year with positive CF
is 2023 which is the first year of sales. Additionally, in 2018 and 2020, there is a high impact of the expenses on R&D on the CF that correspond
to the Clinical Trials phase II/III-B and Clinical Trials phase IV.
Provisional Income Statement
Source: Author
Table 18 - Income Statement, Commercialization
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Sales - € - € - € - € - € - € - € 49 309 328,22 € 67 230 344,31 € 80 517 690,91 € 95 073 364,41 € 117 873 434,95 €
Costs of Goods Sold - € - € - € - € - € - € - € 13 225 250,41 € 17 080 511,00 € 20 120 193,41 € 23 157 455,14 € 27 735 071,95 €
Gross Margin - € - € - € - € - € - € - € 36 084 077,81 € 50 149 833,31 € 60 397 497,50 € 71 915 909,27 € 90 138 363,01 €
External Services and Supplies 105 300,00 € 107 306,40 € 101 092,53 € 102 914,38 € 104 772,67 € 106 668,12 € 109 274,53 € 134 830,15 € 137 326,75 € 139 873,29 € 142 470,75 € 145 120,17 €
Personnel Costs 204 755,32 € 249 361,32 € 286 349,23 € 293 327,12 € 300 479,47 € 307 810,62 € 371 074,24 € 1 915 338,28 € 2 537 161,10 € 3 009 864,20 € 3 402 560,68 € 4 001 840,84 €
EBITDA 310 055,32 €- 356 667,72 €- 387 441,75 €- 396 241,50 €- 405 252,13 €- 414 478,74 €- 480 348,77 €- 34 033 909,38 € 47 475 345,46 € 57 247 760,02 € 68 370 877,84 € 85 991 402,00 €
Depreciations 16 051,50 € 22 436,09 € 333 362,41 € 333 365,56 € 765 129,17 € 765 666,56 € 772 713,89 € 780 987,77 € 782 018,80 € 782 632,89 € 783 213,96 € 776 066,25 €
EBT 326 106,83 €- 379 103,81 €- 720 804,16 €- 729 607,07 €- 1 170 381,30 €- 1 180 145,30 €- 1 253 062,65 €- 33 252 921,61 € 46 693 326,66 € 56 465 127,13 € 67 587 663,88 € 85 215 335,75 €
Deductible Losses - € 326 106,83 €- 52 996,98 €- 667 807,18 €- 61 799,89 €- 1 108 581,41 €- 71 563,89 €- 1 181 498,77 €- - € - € - € - €
Taxable Amount (Matéria Colectável) 326 106,83 €- 52 996,98 €- 667 807,18 €- 61 799,89 €- 1 108 581,41 €- 71 563,89 €- 1 181 498,77 €- 34 434 420,38 € 46 693 326,66 € 56 465 127,13 € 67 587 663,88 € 85 215 335,75 €
Taxes on Profits - € - € - € - € - € - € - € 7 059 056,18 € 9 572 131,97 € 11 575 351,06 € 13 855 471,10 € 17 469 143,83 €
NET INCOME 326 106,83 €- 379 103,81 €- 720 804,16 €- 729 607,07 €- 1 170 381,30 €- 1 180 145,30 €- 1 253 062,65 €- 26 193 865,43 € 37 121 194,70 € 44 889 776,07 € 53 732 192,78 € 67 746 191,92 €
NOPAT 310 055,32 €- 356 667,72 €- 387 441,75 €- 396 241,50 €- 405 252,13 €- 414 478,74 €- 480 348,77 €- 26 974 853,20 € 37 903 213,49 € 45 672 408,96 € 54 515 406,75 € 68 522 258,17 €
INCOME STATEMENT - CURRENT PRICES
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
69
Financial Plan
Table 19 - Financial Plan, Commercialization
Source: Author
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
FINANCIAL RESOURCES
EBITDA 310 055,32 €- 356 667,72 €- 387 441,75 €- 396 241,50 €- 405 252,13 €- 414 478,74 €- 480 348,77 €- 34 033 909,38 € 47 475 345,46 € 57 247 760,02 € 68 370 877,84 € 85 991 402,00 €
Uninvestment in NWC 11 375,40 € 2 945,05 € - € 117 890,91 € - € 163 392,65 € 2 184,64 € - € - € - € - € - €
Shared Capital 5 000 000,00 € - € - € - € - € - € - € - € - € - € - € - €
Other Equity Instruments - € - € - € - € - € 30 000,00 € 1 500 000,00 € 1 530 000,00 €- - € - € - € - €
Bank Loans in Euros 8 000 000,00 € - € - € - € - € - € - € - € - € - € - € - €
Financial Aplication Recovery - € - € 11 099 996,43 € 3 422 388,29 € 2 129 360,41 € - € - € - € 17 230 247,91 € 50 106 596,20 € 84 833 250,73 € 126 621 370,73 €
Return of Financial Apllications - € - € 166 499,95 € 51 335,82 € 31 940,41 € - € - € - € 258 453,72 € 751 598,94 € 1 272 498,76 € 1 899 320,56 €
TOTAL FINANCIAL RESOURCES 12 701 320,07 € 353 722,67 €- 10 879 054,62 € 3 195 373,52 € 1 756 048,68 € 221 086,09 €- 1 021 835,87 € 32 503 909,38 € 64 964 047,08 € 108 105 955,17 € 154 476 627,33 € 214 512 093,28 €
FINANCIAL NEEDS
Investment in Fixed Assets 93 373,23 € 25 572,95 € 6 218 071,57 € - € 8 652 453,31 € 28 262,76 € 28 398,67 € 106 731,84 € 29 661,55 € 30 766,62 € 30 562,05 € 31 324,74 €
Investment in NWC - € - € 116 297,36 € - € 163 215,11 € - € - € 4 089 122,59 € 1 609 517,81 € 1 179 228,51 € 1 288 629,87 € 1 994 699,26 €
Payout - € - € - € - € - € - € - € - € 6 039 876,86 € 11 175 103,62 € 13 630 925,17 € 16 415 516,79 €
GOPE - € - € - € - € - € - € - € - € 5 140 304,30 € 9 552 451,97 € 11 562 231,06 € 13 848 911,10 €
Reimbursment of Bank Loans - € 800 000,00 € 800 000,00 € 800 000,00 € 800 000,00 € 800 000,00 € 800 000,00 € 800 000,00 € 800 000,00 € 800 000,00 € 800 000,00 € - €
Reimbursment of Short-run Financing - € - € - € - € - € 8 340 533,26 € 9 878 386,44 € 10 149 592,81 € - € - € - € - €
Interests of Bank Loans - € 320 000,00 € 288 000,00 € 256 000,00 € 224 000,00 € 192 000,00 € 160 000,00 € 128 000,00 € 96 000,00 € 64 000,00 € 32 000,00 € - €
Taxes on revenues from financial applications - € - € 34 132,49 € 10 523,84 € 6 547,78 € - € - € - € 52 983,01 € 154 077,78 € 260 862,25 € 389 360,71 €
TOTAL FINANCIAL NEEDS 93 373,23 € 1 145 572,95 € 7 456 501,42 € 1 066 523,84 € 9 846 216,21 € 9 360 796,02 € 10 866 785,11 € 15 273 447,25 € 13 768 343,54 € 22 955 628,50 € 27 605 210,39 € 32 679 812,60 €
TARGETED VALUE 30 12 607 946,84 € 8 654,79 € 8 819,70 € 8 308,97 € 8 458,72 € 8 611,45 € 8 767,24 € 8 981,47 € 1 098 088,81 € 1 415 164,75 € 1 665 210,96 € 1 915 062,40 €
VALUE TO FINANCE - € - € - € - € 8 090 317,27 € 9 582 034,84 € 9 845 105,03 € - € - € - € - € - €
VALUE TO APPLY - € 11 099 996,43 € 3 422 388,29 € 2 129 360,41 € - € - € - € 17 230 247,91 € 50 106 596,20 € 84 833 250,73 € 126 621 370,73 € 181 582 429,24 €
Short-run Financing - € - € - € - € 8 340 533,26 € 9 878 386,44 € 10 149 592,81 € - € - € - € - € - €
Interests of Short-run Financing - € - € - € - € 250 216,00 € 296 351,59 € 304 487,78 € - € - € - € - € - €
CASH AND EQUIVALENTS 12 607 946,84 € 12 599 292,05 €- 164,91 € 510,73 €- 149,74 € 152,74 € 155,79 € 214,23 € 1 089 107,35 € 317 075,93 € 250 046,21 € 249 851,44 €
CUMULATIVE CASH 12 607 946,84 € 8 654,79 € 8 819,70 € 8 308,97 € 8 458,72 € 8 611,45 € 8 767,24 € 8 981,47 € 1 098 088,81 € 1 415 164,75 € 1 665 210,96 € 1 915 062,40 €
FINANCIAL PLAN - CURRENT PRICES
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
70
Provisional Balance Sheet
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
ASSETS
Non-current Assets
Intangible Assets
R&D Expenses - € - € - € - € 8 194 223,69 € 7 762 948,76 € 7 331 673,83 € 6 900 398,90 € 6 469 123,97 € 6 037 849,04 € 5 606 574,11 € 5 175 299,17 €
Patent - € - € 5 907 024,00 € 5 596 128,00 € 5 285 232,00 € 4 974 336,00 € 4 663 440,00 € 4 352 544,00 € 4 041 648,00 € 3 730 752,00 € 3 419 856,00 € 3 108 960,00 €
Sub-Total - € - € 5 907 024,00 € 5 596 128,00 € 13 479 455,69 € 12 737 284,76 € 11 995 113,83 € 11 252 942,90 € 10 510 771,97 € 9 768 601,04 € 9 026 430,11 € 8 284 259,17 €
Tangible Assets
Transportation Equipment 18 750,00 € 31 550,00 € 18 950,00 € 6 350,00 € 20 216,01 € 34 097,67 € 41 518,30 € 42 348,66 € 43 195,64 € 44 059,55 € 44 940,74 € 53 580,17 €
Laboratory Equipment 57 904,72 € 48 258,43 € 38 612,15 € 28 965,87 € 19 319,59 € 9 673,30 € 27,02 € 66 682,44 € 55 645,34 € 44 608,25 € 33 571,15 € 22 534,06 €
Administrative Equipment 667,01 € 650,15 € 581,60 € 358,32 € 135,03 € 666,78 € 748,16 € 1 177,38 € 1 181,19 € 1 659,03 € 1 333,95 € 1 161,05 €
Sub-Total 77 321,73 € 80 458,59 € 58 143,75 € 35 674,18 € 39 670,63 € 44 437,76 € 42 293,48 € 110 208,48 € 100 022,17 € 90 326,83 € 79 845,85 € 77 275,28 €
Current Assets
Inventory - € - € - € - € - € - € - € 1 136 823,20 € 1 594 512,90 € 1 935 253,03 € 2 276 974,10 € 2 772 802,05 €
Account Receivables - € - € - € - € - € - € - € 4 109 110,69 € 5 602 528,69 € 6 709 807,58 € 7 922 780,37 € 9 822 786,25 €
GOPE 3 755,74 € 2 511,97 € 119 458,17 € 1 945,50 € 165 547,56 € 2 550,75 € 2 602,59 € - € - € - € - € - €
Financial applications - € 11 099 996,43 € 3 422 388,29 € 2 129 360,41 € - € - € - € 17 230 247,91 € 50 106 596,20 € 84 833 250,73 € 126 621 370,73 € 181 582 429,24 €
Cash and Equivalents 12 607 946,84 € 8 654,79 € 8 819,70 € 8 308,97 € 8 458,72 € 8 611,45 € 8 767,24 € 8 981,47 € 1 098 088,81 € 1 415 164,75 € 1 665 210,96 € 1 915 062,40 €
Sub-Total 12 611 702,58 € 11 111 163,19 € 3 550 666,16 € 2 139 614,89 € 174 006,28 € 11 162,20 € 11 369,83 € 22 485 163,26 € 58 401 726,61 € 94 893 476,08 € 138 486 336,15 € 196 093 079,94 €
TOTAL ASSETS 12 689 024,31 € 11 191 621,77 € 9 515 833,91 € 7 771 417,07 € 13 693 132,60 € 12 792 884,72 € 12 048 777,14 € 33 848 314,64 € 69 012 520,74 € 104 752 403,95 € 147 592 612,11 € 204 454 614,39 €
EQUITY
Shared Capital 5 000 000,00 € 5 000 000,00 € 5 000 000,00 € 5 000 000,00 € 5 000 000,00 € 5 000 000,00 € 5 000 000,00 € 5 000 000,00 € 5 000 000,00 € 5 000 000,00 € 5 000 000,00 € 5 000 000,00 €
Other Equity Instruments - € - € - € - € - € 30 000,00 € 1 530 000,00 € - € - € - € - € - €
Reserves - € - € - € - € - € - € - € 375 000,00 € 375 000,00 € 375 000,00 € 375 000,00 € 375 000,00 €
Reserves and Retained Earnings - € 326 106,83 €- 1 025 210,64 €- 1 901 647,34 €- 2 846 442,43 €- 4 465 647,10 €- 6 134 143,99 €- 7 851 694,43 €- 13 718 046,02 € 39 793 287,80 € 71 598 779,86 € 109 901 652,37 €
Retained Earnings 326 106,83 €- 699 103,81 €- 876 436,71 €- 944 795,08 €- 1 619 204,67 €- 1 668 496,89 €- 1 717 550,44 €- 21 569 740,45 € 26 075 241,78 € 31 805 492,06 € 38 302 872,51 € 48 479 306,24 €
Payout - € - € - € - € - € - € - € 6 039 876,86 € 11 175 103,62 € 13 630 925,17 € 16 415 516,79 € 20 776 845,53 €
TOTAL EQUITY 4 673 893,17 € 3 974 789,36 € 3 098 352,66 € 2 153 557,57 € 534 352,90 € 1 104 143,99 €- 1 321 694,43 €- 25 132 922,88 € 56 343 391,42 € 90 604 705,03 € 131 692 169,16 € 184 532 804,14 €
LIABILITIES
Long Run Liabilities
Bank Loans 7 200 000,00 € 6 400 000,00 € 5 600 000,00 € 4 800 000,00 € 4 000 000,00 € 3 200 000,00 € 2 400 000,00 € 1 600 000,00 € 800 000,00 € - € - € - €
Sub-Total 7 200 000,00 € 6 400 000,00 € 5 600 000,00 € 4 800 000,00 € 4 000 000,00 € 3 200 000,00 € 2 400 000,00 € 1 600 000,00 € 800 000,00 € - € - € - €
Short Run Liabilities
Account Payables 8 654,79 € 8 942,20 € 8 424,38 € 8 576,20 € 8 731,06 € 8 889,01 € 9 106,21 € 1 113 340,05 € 1 434 819,81 € 1 688 338,89 € 1 941 660,49 € 2 323 349,34 €
GOPE 6 476,34 € 7 890,21 € 9 056,88 € 9 283,30 € 9 515,38 € 9 753,27 € 11 772,54 € 61 747,41 € 81 857,54 € 97 128,97 € 109 871,36 € 129 317,08 €
Taxes on Profits - € - € - € - € - € - € - € 5 140 304,30 € 9 552 451,97 € 11 562 231,06 € 13 848 911,10 € 17 469 143,83 €
Bank Loans
Bank Loans in Euros 800 000,00 € 800 000,00 € 800 000,00 € 800 000,00 € 800 000,00 € 800 000,00 € 800 000,00 € 800 000,00 € 800 000,00 € 800 000,00 € - € - €
Short-Run Financing - € - € - € - € 8 340 533,26 € 9 878 386,44 € 10 149 592,81 € - € - € - € - € - €
Sub-Total 815 131,14 € 816 832,41 € 817 481,26 € 817 859,50 € 9 158 779,70 € 10 697 028,71 € 10 970 471,57 € 7 115 391,76 € 11 869 129,32 € 14 147 698,92 € 15 900 442,95 € 19 921 810,25 €
TOTAL LIABILITIES 8 015 131,14 € 7 216 832,41 € 6 417 481,26 € 5 617 859,50 € 13 158 779,70 € 13 897 028,71 € 13 370 471,57 € 8 715 391,76 € 12 669 129,32 € 14 147 698,92 € 15 900 442,95 € 19 921 810,25 €
TOTAL EQUITY AND LIABILITES 12 689 024,31 € 11 191 621,77 € 9 515 833,91 € 7 771 417,07 € 13 693 132,60 € 12 792 884,72 € 12 048 777,14 € 33 848 314,64 € 69 012 520,74 € 104 752 403,95 € 147 592 612,11 € 204 454 614,39 €
BALANÇO - A PREÇOS CORRENTESTable 20 - Balance Sheet, Commercialization
Source: Author
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
71
Break-Even Point
The Break-Even analysis allows the company which will commercialize the product to
understand how much units of product needs to sell in order to cover the investments made. In
this way, the company has to sell 179783 units of Prophyl-ACT to cover the total investment.
With a unit selling price of 21.89€, the company has to make 393546.73€ in sales to achieve
this situation.
Sensitivity Analysis
Sensitivity analysis is an important risk management tool because it allows to identify
some risks behind a project and quantify them, in order to understand the real struggle of the
risk considered and build the mitigation plan.
Given that the purchasing company is well established in the market, there are some
risks intrinsic to the R&D phases that are minimized. In this way, it is important to emphasize
the risk related to a negative variation on the sales and study its impact on the viability of the
project.
Table 21 shows the impact of a variation on the quantity sold of Prophyl-ACT during
the first five years of sales. This variation is considered to be less 20% in a pessimistic
scenario and more 20% in an optimistic scenario. This numbers are assumed considering the
Source: Author
Figure 11 - Break-Even Point, Commercialization
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
72
probability of the appearance of a competitor in the market, which can struggle the
commercial success of the project.
Other important variable that the company may have difficulties to control are the
variable costs of manufacturing the drug. Therefore, if the variable costs increase the margin
will decrease, considering that the selling price cannot increase. Thus, an analysis considering
a variation of the unit margin helps to observe the impact on varying the variable costs of the
company.
In order to have a more detailed sensitivity analysis, it is important understand the
impact of a combination of changes in the unit margin and in the quantity of Prophyl-ACT
sold. In this fashion, table 23 joints the two changes and gives the impact on the Net Present
Value of the project.
-20% 20%
96 815 006,12 € 66 099 114,89 € 127 530 897,49 €
47,02% 39,41% 53,05%
7,03 7,91 6,89
3 935 461,73 € 3 981 540,57 € 4 016 466,27 €
179 783 181 888 183 484
IRR
Payback
BEP
€
Quantity
Scenarios Actual Pessimistic Optimistic
Variable Cells
Quantity Sold
Results Cells
NPV
55% 45% 65%
96 815 006,12 € 81 450 044,58 € 112 179 967,81 €
47,02% 43,47% 50,19%
7,03 7,22 6,94
3 935 461,73 € 3 934 931,80 € 3 965 912,94 €
179 783 199 742 164 697Quantity
NPV
IRR
Payback
BEP
€
Variable Cells
Unit Margin
Results Cells
Scenarios Actual Pessimistic Optimistic
Table 22 - Sensitivity Analysis for Unit Margin, Commercialization
Source: Author
Table 21 - Sensitivity Analysis for Quantity Sold, Commercialization
Source: Author
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
73
Thus, combining a negative variation of 20% on product sold with a 45% margin on
the products, the company will obtain a Net Present Value of 53807145.60€. On the other
side, if the company increase its margin to 65% and the sales of the product are 20% higher
than the expected, the NPV of AMS will be 145968851.43€.
Ratios
In order to provide relevant and reliable information during the negotiations, and given
that AMS does not have the confidential information about the pharmaceutical company that
will buy the patent, the most important ratios to provide are those related with the sales
performance. The following tables shows those indicators along the years of activity
provided.
Financial Indicatiors 2023 2024 2025 2026 2027
Return On Investment (ROI) 77% 54% 43% 36% 33%
Return on Assets (ROA) 98% 68% 54% 46% 42%
Return on Equity (ROE) 104% 66% 50% 41% 37%
Source: Author
Source: Author
-20% -10% 0% 10% 20%
45% 53 807 145,60 € 67 628 595,09 € 81 450 044,58 € 95 271 494,07 € 109 092 943,55 €
50% 59 925 066,39 € 74 511 255,98 € 89 097 445,56 € 103 683 635,15 € 118 269 824,74 €
55% 66 099 114,89 € 81 457 060,54 € 96 815 006,19 € 112 172 951,84 € 127 530 897,49 €
60% 72 217 035,68 € 88 339 721,43 € 104 462 407,18 € 120 585 092,93 € 136 707 778,67 €
65% 78 391 084,18 € 95 285 526,00 € 112 179 967,81 € 129 074 409,62 € 145 968 851,43 €
Table 23 - Sensitivity Analysis for Quantity Sold and Unit Margin, Commercialization
Table 25 - Economic Indicators, Commercialization
Source: Author
Table 24 - Financial Indicators
Economic Indicators 2023 2024 2025 2026 2027
Growth Rate of the Business 36% 20% 18% 24%
Operating Margin 69% 71% 71% 72% 73%
Rentabilidade Líquida das Vendas 53% 55% 56% 57% 57%
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
74
12. Risks of the project
The exercise performed in this business plan was made in order to forecast all the
processes and activities that will be done and identify the needs of the project. This work was
based in assumptions that are willing to be right. However, there are variables that cannot be
identified and so, there are some risks behind this business plan related with the external
environment.
First of all, this project needs a huge amount of investment to start the phases of R&D.
The company is very exposed to external investors and the fund raising process may be
planned accurately. However, given that there is a considerably high probability of failing in
crucial phases, investors may prefer to invest in other projects with lower risks. In this way,
the company shall try to give a good compensation to those investors that fund the beginning
of the company, giving an important part of the company’s shares to them. Additionally, the
out-licensing after the Clinical Trials Phase I helps to divide the risk between the companies
and the investors have their return earlier.
Advancing for further phases, considering that the initial investment is raised, the
company will proceed to expensive and risky legal phases that are mandatory in the
development of drugs. In this way, if the company fails the Proof of Concept or the Clinical
Trials Phase I/II-A, this business plan does not make sense anymore, given that the patent will
not be sold to a pharmaceutical company. However, instead of advancing to a pharmaceutical
product, the company may follow to develop and launch a food supplement to the
nutraceutical market. This is only possible due to the usage of already approved compounds
on the manufacturing of the product.
Finally, other important risk that the company may face is the phase of negotiating the
patent sale with a big pharmaceutical company. Since the company does not have enough
funds and expertise to develop an efficient supply chain to launch the product, this will put
the company in a weaker situation in negotiations, which can cause a price decrease of the
patent, affecting the profitability of the company.
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
75
13. Conclusion
After performing all the analysis included in this business plan, there are some
important conclusions to highlight.
First of all, one problem identified was the blockbuster business model that
characterizes the pharmaceutical industry. This business plan is an additional example of an
alternative to the blockbuster business model, by dividing the R&D phases to some
specialized SME and the commercial phase to big pharmaceutical countries. With this, the
risks are divided by those two types of companies and both companies would save funds. This
business model should be a realistic alternative to the blockbuster business model.
Secondly, focusing on AntiMalarial Solutions, the vast experience of its members on
the research in malaria constitutes a unique resource of the company to perform R&D in this
specific disease. This means that the company will be able to develop more therapeutics to
offer to the pharmaceutical industry. As follows, the strategy of the company is adequate
given that will focus on the core competencies of the human resources of the company and it
will avoid the risks associated with other activities which are not known by the company’s
members.
Considering the sale of the patent, the most important asset of AMS, the company will
receive a value that is a fair value for it. By covering the costs that the company incurred
during the first three years, it will allow to give an adequate compensation to shareholders and
to save some money to advance to R&D directed to other therapeutics.
Finally, the financials of the company indicate that this project is worth of investment,
due to a NPV of 490267.18€, an Internal Rate of Return of 16.43% and a Payback period of 3
years, 10 months and 17 days.
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
76
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BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
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Appendix
Appendix I – Internal, External and Competitive Analysis
Easy communication of the solution delivered
Product Performance
Team's Knowledge about malaria
Use of already approved compounds
Simplicity of the organization's structure
Tasks well defined within the company
Legal procedures require high investments
Lack of network to establish the needed agreements and
partnerships
Lack of knowledge of the total costs of the business
High funding needs due to expensive R&D
Market Size
Market allies and partners, in order to deliver the product to the
maximum of travellers
Existing and well-established distribution channels
High number of travellers that do not take prophylactic
medicines to avoid malaria
Important lack on prophylactic solutions to avoid malaria
Possibility to out-license the drug to well established
pharmaceutical companies
Possibility of using the technology in different applications
Adverse effects of existing prophylactic medicines
Low price of direct competition
Worldwide effort to develop alternative products to treat
malaria
High possibility of new entrants with better solutions
Opportunities
Threats
Strengths
External Factors
Weaknesses
Internal Factors
Table 26 - SWOT Analysis
Source: Author
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
81
Source: Author
1 2 3 4 5
High x Low
High x Low
Low x High
Low x High
Low x High
x
Low x High
High x Low
Low x High
Big x Small
Low x High
Low x High
Low x High
High x Low
High x Low
High x Low
Low x High
High x Low
High x Low
High x Low
High x Low
Low x High
2,5
Price combination between suppliers
Size of our company
2,67
Price of competitors' products
Efficacy of the direct competitors
Clinical Trials performance
Incentives to R&D in the area
Global Force Value
Global Force Value
Global Force Value
Severity of Side effects
Parasite resistance
Threat of New Entrants
Porter's 5 Forces Model
3,71
4,333333333
1,5
Number of Suppliers available
Number of travels per client
Number of clients
Information availability to clients
Price of the medicine
Severity Side effects of the medicine
Client's cost of changing the medicine
Number of products
Efficacy of Substitute products
Global Force Value
Global Force Value
Bargaining Power of Buyers
Bargaining Power of Suppliers
Threat of Substitutes
Willingness to take the risk
Competitive Rivalry
Legal requirements
Capital Required to enter the market
Venture Capital interested to invest
Time-to-market period
Table 27 - Porter's 5 Forces
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
82
Opportunities Threats
SO Strategies: ST Strategies
Communicate the product to attract travellers
that buy other prophylactics;
Development of a high performance product to
facilitate the approvals on legal procedures and
clinical trials;
Communicate the product to attract travellers
that do not buy prophylactics;
Maintain a simple structure to better cope with
the uncertainty and keep the costs under control
Use the team's knowledge to apply to R&D
funds and get financial assets to accomplish the
plan
Use of this technology in other ways, in the case
of not getting the approval on clinical trials;
Use the team's knowledge to develop other
solutions
Out-license, as a way to avoid huge investments
on further clinical trials and commercialization
Provide a simple communication to attract
possible buyers to the patent
Product performance and easy communication to
raise funds to Clinical Trials Phase I/II-A.
WO Strategies WT Strategies
Use the market size and market growth to
increase the selling price of the patent
Reduce the time to and avoid being overpassed
by new competitors in the market
Explore the lack of solutions to develop an
important pipeline of investigation, reducing the
dependence of a single product
Getting approval on clinical trials in order to
avoid more investments in R&D and legal
procedures
Seize the worldwide effort to develop new
antimalarial medicines to attract investment and
funding to reduce the expensive R&D activities
External Factors
Strengths
Weaknesses
Internal
Factors
Table 28 - TOWS Analysis
Source: Author
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
83
Appendix 2 – Sales Forecast and Financial Planning - AMS
Table 29 - Project's Assumptions
Source: Author
Interest Rate Treasury bills 10 years 2,84% Average Invetory Period 30
Short-Run Financing Interest Rate 3,00% Account Recievables Period 30
Short-Run Financial Applications Interest Rate 1,50% Account Payables Period 30
Average Income Taxes 14,50% Account Recievables/Payables VAT 30
Social Security Rate (Employees) 11,00% Account Payables Period (Social Security) 30
Social Security Rate (Firms) 23,75% Account Payables Period (Employees Income Taxes) 30
Workers Accidents Insurance 1,00% Net Working Capital Period 30
Food Allowance (4,27/day) 93,94 €
Balance Local State Tax (Derrama Estadual IRC) 1,50%
Average Tax Rate 19,00%
Taxes on Profits 20,50%
Payout 50,00%
VAT undertaken to State (IVA Liquidado) 23,00%
VAT Payed Tax (IVA Dedutível) 23,00%
EUR/USD Exchange Rate 1,08$
Assumptions of the Project
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
84
Source: Author
2016 2017 2018 2019
0 1 2 3
Accumulated Factor of Wages Increase 1,000 1,020 1,046 1,072
Staff
CEO 1 1 1 1
CIO 1 1 1 1
Lab Technician 2 2 2 2
Crinical Trials Specialist 1 1 1
Marketing Manager
Administrative 1 1 1 1
Total Staff 5 6 6 6
Average Monthly Salary
CEO 3 850,43€ 3 850,43€ 3 927,44€ 4 025,62€ 4 126,27€
CIO 3 390,48€ 3 390,48€ 3 458,29€ 3 544,75€ 3 633,37€
Lab Technician 1 600,43€ 1 600,43€ 1 632,44€ 1 673,25€ 1 715,08€
Crinical Trials Specialist 2 221,86€ 2 221,86€ 2 266,30€ 2 322,95€ 2 381,03€
Marketing Manager 2 714,72€ 2 714,72€ 2 769,01€ 2 838,24€ 2 909,20€
Sales Manager 3 707,58€ 3 707,58€ 3 781,73€ 3 876,27€ 3 973,18€
Sales Representative 3 564,72€ 3 564,72€ 3 636,01€ 3 726,91€ 3 820,09€
Quality Control Manager 1 636,15€ 1 636,15€ 1 668,87€ 1 710,59€ 1 753,36€
Administrative 986,15€ 986,15€ 1 005,87€ 1 031,02€ 1 056,80€
Average Annual Salary
CEO 53 906,02€ 54 984,14€ 56 358,74€ 57 767,71€
CIO 47 466,72€ 48 416,05€ 49 626,46€ 50 867,12€
Lab Technician 44 812,04€ 45 708,28€ 46 850,99€ 48 022,26€
Crinical Trials Specialist -€ 31 728,16€ 32 521,36€ 33 334,40€
Marketing Manager -€ -€ -€ -€
Administrative 13 806,10€ 14 082,22€ 14 434,28€ 14 795,13€
Total costs with wages 159 990,88€ 194 918,86€ 199 791,83€ 204 786,63€
Variable Salaries (on Patent Sale) 2% 125 963,94 €
Total Personel Costs With Variable Salary 159 990,88€ 194 918,86€ 199 791,83€ 330 750,57€
Other Personel Costs
Food Allawance 93,94€ 5 166,70€ 6 200,04€ 6 200,04€ 6 200,04€
Social Security Discounts 23,75% 37 997,83€ 46 293,23€ 47 450,56€ 78 553,26€
Workers Accident Insurance 1,00% 1 599,91€ 1 949,19€ 1 997,92€ 3 307,51€
Total Personel Costs 204 755,32€ 249 361,32€ 255 440,35€ 418 811,38€
Personnel Costs - Current Prices
Table 30 - Personnel Costs, AMS
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
85
VALUE ADDED TAX 2016 2017 2018 2019
Total Revenues (Patent) 6 298 197,24 €
RECEIVED VAT 23,00% - € - € - € 1 448 585,37 €
Total Purchases 91 425,00 € 92 727,80 € 86 091,80 € 87 613,63 €
Investment in Assets 393 373,23 € 142 258,77 € 2 269 397,59 € - €
PAYED VAT 23,00% 111 503,59 € 54 046,91 € 541 762,56 € 20 151,14 €
IVA TO RECEIVE/PAY 111 503,59 €- 54 046,91 €- 541 762,56 €- 1 428 434,23 €
VAT TO Receive 30 9 164,68 €- 4 442,21 €- 44 528,43 €- 117 405,55 €
SOCIAL SECURITY AND INCOME TAXES 2016 2017 2018 2019
Wages (14 months) 159 990,88 € 194 918,86 € 199 791,83 € 330 750,57 €
Social Security (Company) 23,75% 37 997,83 € 46 293,23 € 47 450,56 € 78 553,26 €
Social Security (Workers) 11,00% 17 599,00 € 21 441,07 € 21 977,10 € 36 382,56 €
SOCIAL SECURITY 30 4 569,60 € 5 567,20 € 5 706,38 € 9 446,78 €
Personnel Income Tax (Retention) 14,50% 23 198,68 € 28 263,23 € 28 969,82 € 47 958,83 €
INCOME TAX 30 1 906,74 € 2 323,01 € 2 381,08 € 3 941,82 €
SOCIAL SECURITY AND INCOME TAXES 6 476,34 € 7 890,21 € 8 087,46 € 13 388,60 €
GOVERNMENT AND OTHER PUBLIC ENTITIES - VAT, SOCIAL SECURITY, INCOME TAXES - CURRENT PRICES
Table 32 - Government and Other Public Entities, AMS
Source: Author
2016 2017 2018 2019
Aquisition Cost Useful Life Dep. Tax 0 1 2 3
Accumulated Inflation Factor 1,000 1,016 1,036 1,057
FIXED TANGIBLE ASSETS
Transportation Equipments
Vehicle 25 000,00€ 4 25% 25 000,00 € - € - € - €
Sub-total 25 000,00€ 25 000,00 € - € - € - €
Lab Equipmens
Flow Cytometer 45 000,00€ 7 14% 45 000,00 € - € - € - €
Incubator 13 000,00€ 7 14% 13 000,00 € - € - € - €
Fridge 2 091,00€ 7 14% 2 091,00 € - € - € - €
Pipettes 5 000,00€ 7 14% 5 000,00 € - € - € - €
Freezer 2 460,00€ 7 14% 2 460,00 € - € - € - €
Sub-total 67 551,00€ 67 551,00 € - € - € - €
Administrative Equipment
Printing Machine 529,00€ 5 20% 529,00 € - € - € - €
Mobile Phone 1 (CEO) 146,26€ 5 20% 146,26 € - € - € - €
Mobile Phone 2 (Clinical Trials Specialist) 146,26€ 5 20% 148,44 € - € - €
Phone 1 23,97€ 5 20% 23,97 € - € - € - €
Phone 2 23,97€ 5 20% 24,33 € - € - €
Furniture 123,00€ 8 13% 123,00 € - € - € - €
Sub-total 992,46€ 822,23 € 172,77 € - € - €
FIXED TANGIBLE ASSETS 93 543,46€ 93 373,23 € 172,77 € - € - €
INTAGIBLE ASSETS
R&D Expenses
R&D for other products 80 000,00€ 3 33% 81 192,00 € - € - €
Proof of Concept 300 000,00€ 20 5% 300 000,00 € - € - € - €
Clinical Trials Phase I/IIA 2 200 000,00€ 20 5% 2 269 397,59 € - €
Sub-total 2 500 000,00€ 300 000,00 € 81 192,00 € 2 269 397,59 € - €
Industrial Property
Patent 60 000,00€ 20 5% 60 894,00 € - € - €
Sub-total 60 000,00€ - € 60 894,00 € - € - €
INTANGIBLE ASSETS 2 560 000,00€ 300 000,00 € 142 086,00 € 2 269 397,59 € - €
TOTAL ASSETS 2 653 543,46€ 393 373,23 € 142 258,77 € 2 269 397,59 € - €
INVESTMENT IN FIXED CAPITAL - REINVESTMENTS MADE AFTER THE LAST YEAR AMORTIZATION - CURRENT PRICES
Table 31 - Investments, AMS
Source: Author
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
86
Appendix 3 – Sales Forecast and Financial Planning – Commercialization
2016 2017 2018 2019
Aquisition Cost Useful Life Dep. Tax 0 1 2 3
FIXED TANGIBLE ASSETS
Transportation Equipments
Vehicle 1 25 000,00€ 4 25% 6 250,00€ 6 250,00€ 6 250,00€ 6 250,00€
Sub-total 25 000,00€ 6 250,00€ 6 250,00€ 6 250,00€ 6 250,00€
Lab Equipmens
Flow Cytometer 45 000,00€ 7 14,29% 6 426,00€ 6 426,00€ 6 426,00€ 6 426,00€
Incubator 13 000,00€ 7 14,29% 1 856,40€ 1 856,40€ 1 856,40€ 1 856,40€
Fridge 2 091,00€ 7 14,29% 298,59€ 298,59€ 298,59€ 298,59€
Pipettes 5 000,00€ 7 14,29% 714,00€ 714,00€ 714,00€ 714,00€
Freezer 2 460,00€ 7 14,29% 351,29€ 351,29€ 351,29€ 351,29€
Sub-total 67 551,00€ 9 646,28€ 9 646,28€ 9 646,28€ 9 646,28€
Administrative Equipment
Printing Machine 529,00€ 5 20% 105,80€ 105,80€ 105,80€ 105,80€
Mobile Phone 1 (CEO) 146,26€ 5 20% 29,25€ 29,25€ 29,25€ 29,25€
Mobile Phone 2 (Clinical Trials Specialist) 146,26€ 5 20% 29,69€ 29,69€ 29,69€
Phone 1 23,97€ 5 20% 4,79€ 4,79€ 4,79€ 4,79€
Phone 2 23,97€ 5 20% 4,87€ 4,87€ 4,87€
Furniture 123,00€ 8 13% 15,38€ 15,38€ 15,38€ 15,38€
Sub-total 992,46€ 155,22€ 189,77€ 189,77€ 189,77€
TOTAL DEP. FIXED TANGIBLE ASSETS 93 543,46€ 16 051,50€ 16 086,06€ 16 086,06€ 16 086,06€
INTAGIBLE ASSETS
R&D Expenses
R&D for other products 80 000,00€ 3 33% 27 061,29€ 27 061,29€ 27 061,29€
Proof of Concept 300 000,00€ 20 5% 15 000,00€ 15 000,00€ 15 000,00€ 15 000,00€
Clinical Trials Phase I/IIA 2 200 000,00€ 20 5% 113 469,88€ 113 469,88€
Sub-total 80 000,00€ 15 000,00€ 42 061,29€ 155 531,17€ 155 531,17€
Industrial Property
Patent 60 000,00€ 20 5% 3 044,70€ 3 044,70€ 3 044,70€
Sub-total 60 000,00€ -€ 3 044,70€ 3 044,70€ 3 044,70€
TOTAL DEP. INTANGIBLE ASSETS 140 000,00€ 15 000,00€ 45 105,99€ 158 575,87€ 158 575,87€
TOTAL DEP. ASSETS 233 543,46€ 31 051,50€ 61 192,05€ 174 661,93€ 174 661,93€
AMORTIZATIONS AND DEPRECIATIONS OF FIXED CAPITAL - REINVESTMENTS MADE AFTER THE LAST YEAR AMORTIZATION - CURRENT PRICES
Table 34 - Depreciations and Amortizations, AMS
Source: Author
Travellers to
those regions
(Million)
% Malaria regions
Travelers to malaria
endemic Regions in
2014 (Million)
Sub-Saharan Africa 34,2 100% 34,20
Central America 9,6 100% 9,60
Caribean 22,2 10% 2,22
South America 29,1 5% 1,46
Asia 251,2 10,8% 27,13
Total 74,60
Table 33 - Travellers for malaria endemic regions
Source: Author
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
87
Source: Author
Number of cases
(2010)***% of number of cases
Travelers to malaria
endemic regions
Market entry
year
Austria 48 0,49% 320645 -
Belgium 166 1,69% 1108898 2027
Finland 33 0,34% 220443 -
France 2439 24,87% 16292797 2024
Germany 615 6,27% 4108270 2025
Greece 45 0,46% 300605 -
Ireland 82 0,84% 547769 -
Italy 662 6,75% 4422235 2026
Netherlands 247 2,52% 1649988 2027
Portugal 50 0,51% 334005 2023
Spain 351 3,58% 2344719 2024
Sweden 115 1,17% 768213 -
United Kingdom 1761 17,95% 11763680 2025
Other EU Countries 108 1,10% 721452 -
EU Total 6722 68,54% 44903725
USA 1688 17,21% 11276032 -
China 1398 14,25% 9338799 -
TOTAL 9808 1 65518550
Table 36 - Market entry per year
Source: Author
Number of
Travellers to
endemic malaria
regions (2023)
2023 2024 2025 2026 2027
Portugal 509389 21394 22463 24765 28668 34846
Spain 3575972 150190 157699 173863 201268 244642
France 24848474 1043635 1095816 1208137 1398569 1699969
United Kingdom 17941022 753522 791198 872295 1009790 1227406
Germany 6265599 271839 299702 346942 421710
Italy 6744435 292614 322606 373456 453938
Belgium 1691195 75795 87742 106650
Netherlands 2516424 112780 130556 158691
Total 64092510 1968741 2631629 3089943 3576991 4347852
Table 35 - Quantity sold per country
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
88
Sovaldi Scenario Harvoni Scenario
Units Sold Units Sold
2014 170000 250000
Total Market 10000000 10000000
Aggregated Penetration Rate 4,20%
Table 39 - Market penetration rate
Source: Author
Portugal Spain France UK Germany Italy Belgium Netherlands
Compounds Price 0,78€ 0,78€ 0,78€ 0,78€ 0,78€ 0,78€ 0,78€ 0,78€
Blister & Packaging 5,82€ 5,82€ 5,82€ 5,82€ 5,82€ 5,82€ 5,82€ 5,82€
Manufacturers Cost 3,25€ 3,25€ 3,25€ 3,25€ 3,25€ 3,25€ 3,25€ 3,25€
Unit Manuf. Cost 9,85€ 9,85€ 9,85€ 9,85€ 9,85€ 9,85€ 9,85€ 9,85€
Company's Margin (%) 55,00% 55,00% 55,00% 55,00% 55,00% 55,00% 55,00% 55,00%
Company's Margin (€) 12,04€ 12,04€ 12,04€ 12,04€ 12,04€ 12,04€ 12,04€ 12,04€
Price Prophyl-ACT 21,89€ 21,89€ 21,89€ 21,89€ 21,89€ 21,89€ 21,89€ 21,89€
Wholesalers and Dist. Margin 10,00% 3,50% 6,20% 12,00% 5,05% 6,65% 8,50% 18,50%
Pharmacy Margin 21,90% 22,00% 22,00% 22,00% 24,00% 22,00% 22,00% 22,00%
Pharmacy Fee 0,45€ 0,45€ 0,45€ 0,45€ 0,45€ 0,45€ 0,45€ 0,45€
PVP(s/VAT) 28,87€ 27,47€ 28,06€ 29,33€ 28,25€ 28,16€ 28,57€ 30,76€
Inf Tax 0,40% 0,40% 0,40% 0,40% 0,40% 0,40% 0,40% 0,40%
VAT 6% 10% 10% 20% 19% 10% 20% 6%
End User Price (c/VAT) 30,73€ 30,34€ 30,99€ 35,34€ 33,75€ 31,10€ 34,42€ 32,73€
Table 38 - Price of Prophyl-ACT
€
Compounds Price 0,78€
Blister & Packaging 5,82€
Manufacturers Cost 3,25€
Unit Manuf Cost 9,85€
Table 37 - Manufacturing Cost of Prophyl-ACT
Source: Author
Source: Author
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
89
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
0 1 2 3 4 5 6 7 8 9 10 11
Accumulated Factor of Wages Increase 1,000 1,020 1,046 1,072 1,098 1,126 1,154 1,189 1,224 1,261 1,299 1,338
Staff
CEO 1 1 1 1 1 1 1 1 1 1 1 1
CIO 1 1 1 1 1 1 1 1 1 1 1 1
Lab Technician 2 2 2 2 2 2 2 2 2 3 3 3
Crinical Trials Specialist 1 1 1 1 1 1 1 1 1 1 1
Marketing Manager 1 1 1 1 1 1
Sales Manager 1 1 1 1 1
Sales Representative 3 5 6 6 6
Quality Control Manager 1 1 1 1 1 1 1 1 1 1
Administrative 1 1 1 1 1 1 1 1 1 1 1 1
Total Staff 5 6 7 7 7 7 8 12 14 16 16 16
Average Monthly Salary
CEO 3 850,43 € 3 850,43 € 3 927,44 € 4 025,62 € 4 126,27 € 4 229,42 € 4 335,16 € 4 443,54 € 4 576,84 € 4 714,15 € 4 855,57 € 5 001,24 € 5 151,28 €
CIO 3 390,48 € 3 390,48 € 3 458,29 € 3 544,75 € 3 633,37 € 3 724,20 € 3 817,30 € 3 912,74 € 4 030,12 € 4 151,02 € 4 275,55 € 4 403,82 € 4 535,93 €
Lab Technician 1 600,43 € 1 600,43 € 1 632,44 € 1 673,25 € 1 715,08 € 1 757,96 € 1 801,91 € 1 846,95 € 1 902,36 € 1 959,43 € 2 018,22 € 2 078,76 € 2 141,13 €
Crinical Trials Specialist 2 221,86 € 2 221,86 € 2 266,30 € 2 322,95 € 2 381,03 € 2 440,55 € 2 501,57 € 2 564,11 € 2 641,03 € 2 720,26 € 2 801,87 € 2 885,93 € 2 972,50 €
Marketing Manager 2 714,72 € 2 714,72 € 2 769,01 € 2 838,24 € 2 909,20 € 2 981,93 € 3 056,47 € 3 132,89 € 3 226,87 € 3 323,68 € 3 423,39 € 3 526,09 € 3 631,87 €
Sales Manager 3 707,58 € 3 707,58 € 3 781,73 € 3 876,27 € 3 973,18 € 4 072,51 € 4 174,32 € 4 278,68 € 4 407,04 € 4 539,25 € 4 675,43 € 4 815,69 € 4 960,17 €
Sales Representative 3 564,72 € 3 564,72 € 3 636,01 € 3 726,91 € 3 820,09 € 3 915,59 € 4 013,48 € 4 113,82 € 4 237,23 € 4 364,35 € 4 495,28 € 4 630,14 € 4 769,04 €
Quality Control Manager 1 636,15 € 1 636,15 € 1 668,87 € 1 710,59 € 1 753,36 € 1 797,19 € 1 842,12 € 1 888,18 € 1 944,82 € 2 003,17 € 2 063,26 € 2 125,16 € 2 188,91 €
Administrative 986,15 € 986,15 € 1 005,87 € 1 031,02 € 1 056,80 € 1 083,22 € 1 110,30 € 1 138,05 € 1 172,19 € 1 207,36 € 1 243,58 € 1 280,89 € 1 319,32 €
Average Annual Salary
CEO 53 906,02 € 54 984,14 € 56 358,74 € 57 767,71 € 59 211,91 € 60 692,20 € 62 209,51 € 64 075,79 € 65 998,07 € 67 978,01 € 70 017,35 € 72 117,87 €
CIO 47 466,72 € 48 416,05 € 49 626,46 € 50 867,12 € 52 138,80 € 53 442,26 € 54 778,32 € 56 421,67 € 58 114,32 € 59 857,75 € 61 653,48 € 63 503,09 €
Lab Technician 44 812,04 € 45 708,28 € 46 850,99 € 48 022,26 € 49 222,82 € 50 453,39 € 51 714,72 € 53 266,17 € 54 864,15 € 84 765,11 € 87 308,07 € 89 927,31 €
Crinical Trials Specialist - € 31 728,16 € 32 521,36 € 33 334,40 € 34 167,76 € 35 021,95 € 35 897,50 € 36 974,43 € 38 083,66 € 39 226,17 € 40 402,95 € 41 615,04 €
Marketing Manager - € - € - € - € - € - € 43 860,40 € 45 176,21 € 46 531,50 € 47 927,44 € 49 365,27 € 50 846,22 €
Sales Manager - € - € - € - € - € - € - € 61 698,60 € 63 549,56 € 65 456,04 € 67 419,72 € 69 442,31 €
Sales Representative - € - € - € - € - € - € - € 177 963,70 € 305 504,36 € 377 603,39 € 388 931,49 € 400 599,43 €
Quality Control Manager - € - € 23 948,33 € 24 547,04 € 25 160,71 € 25 789,73 € 26 434,47 € 27 227,51 € 28 044,33 € 28 885,66 € 29 752,23 € 30 644,80 €
Administrative 13 806,10 € 14 082,22 € 14 434,28 € 14 795,13 € 15 165,01 € 15 544,14 € 15 932,74 € 16 410,72 € 16 903,05 € 17 410,14 € 17 932,44 € 18 470,41 €
Total costs with wages 159 990,88 € 194 918,86 € 223 740,16 € 229 333,66 € 235 067,00 € 240 943,68 € 290 827,67 € 539 214,80 € 677 592,99 € 789 109,71 € 812 783,00 € 837 166,49 €
Variable Salaries (on Sales) 2% - € - € - € - € - € - € - € 986 186,56 € 1 344 606,89 € 1 610 353,82 € 1 901 467,29 € 2 357 468,70 €
Total Personel Costs With Variable Salary 159 990,88 € 194 918,86 € 223 740,16 € 229 333,66 € 235 067,00 € 240 943,68 € 290 827,67 € 1 525 401,36 € 2 022 199,87 € 2 399 463,53 € 2 714 250,29 € 3 194 635,19 €
Other Personel Costs
Food Allawance 93,94 € 5 166,70 € 6 200,04 € 7 233,38 € 7 233,38 € 7 233,38 € 7 233,38 € 8 266,72 € 12 400,08 € 14 466,76 € 16 533,44 € 16 533,44 € 16 533,44 €
Social Security Discounts 23,75% 37 997,83 € 46 293,23 € 53 138,29 € 54 466,74 € 55 828,41 € 57 224,12 € 69 071,57 € 362 282,82 € 480 272,47 € 569 872,59 € 644 634,44 € 758 725,86 €
Workers Accident Insurance 1,00% 1 599,91 € 1 949,19 € 2 237,40 € 2 293,34 € 2 350,67 € 2 409,44 € 2 908,28 € 15 254,01 € 20 222,00 € 23 994,64 € 27 142,50 € 31 946,35 €
Total Personel Costs 204 755,32 € 249 361,32 € 286 349,23 € 293 327,12 € 300 479,47 € 307 810,62 € 371 074,24 € 1 915 338,28 € 2 537 161,10 € 3 009 864,20 € 3 402 560,68 € 4 001 840,84 €
Personnel Costs - Current Prices
Table 40 - Personnel costs, Commercialization
Source: Author
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
90
Source: Author
VALUE ADDED TAX 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Total Revenues (Patent) - € - € - € - € - € - € - € 49 309 328,22 € 67 230 344,31 € 80 517 690,91 € 95 073 364,41 € 117 873 434,95 €
RECEIVED VAT 13,00% - € - € - € - € - € - € - € 6 410 212,67 € 8 739 944,76 € 10 467 299,82 € 12 359 537,37 € 15 323 546,54 €
Total Purchases 105 300,00 € 107 306,40 € 101 092,53 € 102 914,38 € 104 772,67 € 106 668,12 € 109 274,53 € 13 360 080,56 € 17 217 837,75 € 20 260 066,70 € 23 299 925,89 € 27 880 192,11 €
Investment in Assets 93 373,23 € 25 572,95 € 6 218 071,57 € - € 8 652 453,31 € 28 262,76 € 28 398,67 € 106 731,84 € 29 661,55 € 30 766,62 € 30 562,05 € 31 324,74 €
PAYED VAT 23,00% 45 694,84 € 30 562,25 € 1 453 407,74 € 23 670,31 € 2 014 161,97 € 31 034,10 € 31 664,84 € 3 097 366,85 € 3 966 924,84 € 4 666 891,66 € 5 366 012,23 € 6 419 648,88 €
IVA TO RECEIVE/PAY 45 694,84 €- 30 562,25 €- 1 453 407,74 €- 23 670,31 €- 2 014 161,97 €- 31 034,10 €- 31 664,84 €- 3 312 845,82 € 4 773 019,92 € 5 800 408,15 € 6 993 525,15 € 8 903 897,67 €
VAT TO Receive 30 3 755,74 €- 2 511,97 €- 119 458,17 €- 1 945,50 €- 165 547,56 €- 2 550,75 €- 2 602,59 €- 272 288,70 € 392 303,01 € 476 745,88 € 574 810,29 € 731 827,21 €
SOCIAL SECURITY AND INCOME TAXES 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Wages (14 months) 159 990,88 € 194 918,86 € 223 740,16 € 229 333,66 € 235 067,00 € 240 943,68 € 290 827,67 € 1 525 401,36 € 2 022 199,87 € 2 399 463,53 € 2 714 250,29 € 3 194 635,19 €
Social Security (Company) 23,75% 37 997,83 € 46 293,23 € 53 138,29 € 54 466,74 € 55 828,41 € 57 224,12 € 69 071,57 € 362 282,82 € 480 272,47 € 569 872,59 € 644 634,44 € 758 725,86 €
Social Security (Workers) 11,00% 17 599,00 € 21 441,07 € 24 611,42 € 25 226,70 € 25 857,37 € 26 503,80 € 31 991,04 € 167 794,15 € 222 441,99 € 263 940,99 € 298 567,53 € 351 409,87 €
SOCIAL SECURITY 30 4 569,60 € 5 567,20 € 6 390,39 € 6 550,15 € 6 713,90 € 6 881,75 € 8 306,52 € 43 567,97 € 57 757,35 € 68 532,62 € 77 523,45 € 91 244,03 €
Personnel Income Tax (Retention) 14,50% 23 198,68 € 28 263,23 € 32 442,32 € 33 253,38 € 34 084,72 € 34 936,83 € 42 170,01 € 221 183,20 € 293 218,98 € 347 922,21 € 393 566,29 € 463 222,10 €
INCOME TAX 30 1 906,74 € 2 323,01 € 2 666,49 € 2 733,15 € 2 801,48 € 2 871,52 € 3 466,03 € 18 179,44 € 24 100,19 € 28 596,35 € 32 347,91 € 38 073,05 €
SOCIAL SECURITY AND INCOME TAXES 6 476,34 € 7 890,21 € 9 056,88 € 9 283,30 € 9 515,38 € 9 753,27 € 11 772,54 € 61 747,41 € 81 857,54 € 97 128,97 € 109 871,36 € 129 317,08 €
GOVERNMENT AND OTHER PUBLIC ENTITIES - VAT, SOCIAL SECURITY, INCOME TAXES - CURRENT PRICES
Table 41 - Government and other public entities, Commercialization
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
91
Source: Author
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Aquisition Cost Useful Life Dep. Tax 0 1 2 3 4 5 6 7 8 9 10 11
Accumulated Inflation Factor 1,000 1,016 1,036 1,057 1,078 1,100 1,122 1,144 1,167 1,190 1,214 1,238
FIXED TANGIBLE ASSETS
Transportation Equipments
Vehicle 1 25 000,00 € 4 25% 25 000,00 € - € - € - € 26 954,68 € - € - € - € 29 176,62 € - € - € - €
Vehicle 2 25 000,00 € 4 25% 25 400,00 € - € - € - € 27 493,78 € - € - € - € 29 760,15 € - € - €
Vehicle 3 25 000,00 € 4 25% 28 043,65 € - € - € - € 30 355,35 € - €
Vehicle 4 25 000,00 € 4 25% 28 604,53 € - € - € - € 30 962,46 €
Sub-total 100 000,00 € 25 000,00 € 25 400,00 € - € - € 26 954,68 € 27 493,78 € 28 043,65 € 28 604,53 € 29 176,62 € 29 760,15 € 30 355,35 € 30 962,46 €
Lab Equipmens
Flow Cytometer 45 000,00 € 7 14% 45 000,00 € - € - € - € - € - € - € 51 488,15 € - € - € - € - €
Incubator 13 000,00 € 7 14% 13 000,00 € - € - € - € - € - € - € 14 874,35 € - € - € - € - €
Fridge 2 091,00 € 7 14% 2 091,00 € - € - € - € - € - € - € 2 392,48 € - € - € - € - €
Pipettes 5 000,00 € 7 14% 5 000,00 € - € - € - € - € - € - € 5 720,91 € - € - € - € - €
Freezer 2 460,00 € 7 14% 2 460,00 € - € - € - € - € - € - € 2 814,69 € - € - € - € - €
Sub-total 67 551,00 € 67 551,00 € - € - € - € - € - € - € 77 290,57 € - € - € - € - €
Administrative Equipment
Printing Machine 529,00 € 5 20% 529,00 € - € - € - € - € 581,77 € - € - € - € 629,72 € - € - €
Mobile Phone 1 (CEO) 146,26 € 5 20% 146,26 € - € - € - € - € 160,85 € - € - € - € 174,11 € - € - €
Mobile Phone 2 (Clinical Trials Specialist) 146,26 € 5 20% 148,60 € - € - € - € - € 164,07 € - € - € - € 177,59 € - €
Mobile Phone 3 (QCM) 146,26 € 5 20% 151,57 € - € - € - € - € 167,35 € - € - € - € 181,14 €
Mobile Phone 4 (Mkt Manager) 146,26 € 5 20% 164,07 € - € - € - € - € 181,14 €
Mobile Phone 5 (Sales Manager) 146,26 € 5 20% 167,35 € - € - € - € - €
Mobile Phone 6 (Sales Rep 1) 146,26 € 5 20% 167,35 € - € - € - € - €
Mobile Phone 7 (Sales Rep 2) 146,26 € 5 20% 167,35 € - € - € - € - €
Mobile Phone 8 (Sales Rep 3) 146,26 € 5 20% 167,35 € - € - € - € - €
Mobile Phone 9 (Sales Rep 4) 146,26 € 5 20% 170,69 € - € - € - €
Mobile Phone 10 (sales Rep 5) 146,26 € 5 20% 170,69 € - € - € - €
Mobile Phone 11 (Sales Rep 6) 146,26 € 5 20% 174,11 € - € - €
Phone 1 23,97 € 5 20% 23,97 € - € - € - € - € 26,36 € - € - € - € 28,53 € - € - €
Phone 2 23,97 € 5 20% 24,35 € - € - € - € - € 26,89 € - € - € - € 29,10 € - €
Furniture 123,00 € 8 13% 123,00 € - € - € - € - € - € - € - € 143,55 € - € - € - €
Sub-total 2 308,80 € 822,23 € 172,95 € 151,57 € - € - € 768,98 € 355,02 € 836,74 € 484,94 € 1 006,48 € 206,70 € 362,29 €
FIXED TANGIBLE ASSETS 169 859,80 € 93 373,23 € 25 572,95 € 151,57 € - € 26 954,68 € 28 262,76 € 28 398,67 € 106 731,84 € 29 661,55 € 30 766,62 € 30 562,05 € 31 324,74 €
INTAGIBLE ASSETS
R&D Expenses
Clinical Trials Phase IIB/III 8 000 000,00 € 20 5% 8 625 498,62 € - € - € - € - € - € - € - €
Sub-total 8 000 000,00 € - € - € - € - € 8 625 498,62 € - € - € - € - € - € - € - €
Industrial Property
Patent 6 000 000,00 € 20 5% 6 217 920,00 € - € - € - € - € - € - € - € - € - €
Sub-total 6 000 000,00 € - € - € 6 217 920,00 € - € - € - € - € - € - € - € - € - €
INTANGIBLE ASSETS 14 000 000,00 € - € - € 6 217 920,00 € - € 8 625 498,62 € - € - € - € - € - € - € - €
TOTAL ASSETS 14 169 859,80 € 93 373,23 € 25 572,95 € 6 218 071,57 € - € 8 652 453,31 € 28 262,76 € 28 398,67 € 106 731,84 € 29 661,55 € 30 766,62 € 30 562,05 € 31 324,74 €
INVESTMENT IN FIXED CAPITAL - REINVESTMENTS MADE AFTER THE LAST YEAR AMORTIZATION - CURRENT PRICES
Table 42 - Investment, Commercialization
BUSINESS PLAN: ANTIMALARIAL SOLUTIONS
92
Source: Author
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Aquisition Cost Useful Life Dep. Tax 0 1 2 3 4 5 6 7 8 9 10 11
FIXED TANGIBLE ASSETS
Transportation Equipments
Vehicle 1 25 000,00 € 4 25% 6 250,00 € 6 250,00 € 6 250,00 € 6 250,00 € 6 738,67 € 6 738,67 € 6 738,67 € 6 738,67 € 7 294,15 € 7 294,15 € 7 294,15 € 7 294,15 €
Vehicle 2 25 000,00 € 4 25% 6 350,00 € 6 350,00 € 6 350,00 € 6 350,00 € 6 873,44 € 6 873,44 € 6 873,44 € 6 873,44 € 7 440,04 € 7 440,04 € 7 440,04 €
Vehicle 3 25 000,00 € 4 25% 7 010,91 € 7 010,91 € 7 010,91 € 7 010,91 € 7 588,84 € 7 588,84 €
Vehicle 4 25 000,00 € 4 25% 7 151,13 € 7 151,13 € 7 151,13 € 7 151,13 € 7 740,61 €
Sub-total 100 000,00 € 6 250,00 € 12 600,00 € 12 600,00 € 12 600,00 € 13 088,67 € 13 612,12 € 20 623,03 € 27 774,16 € 28 329,64 € 28 896,24 € 29 474,16 € 30 063,64 €
Lab Equipmens
Flow Cytometer 45 000,00 € 7 14,29% 6 426,00 € 6 426,00 € 6 426,00 € 6 426,00 € 6 426,00 € 6 426,00 € 6 426,00 € 7 352,51 € 7 352,51 € 7 352,51 € 7 352,51 € 7 352,51 €
Incubator 13 000,00 € 7 14,29% 1 856,40 € 1 856,40 € 1 856,40 € 1 856,40 € 1 856,40 € 1 856,40 € 1 856,40 € 2 124,06 € 2 124,06 € 2 124,06 € 2 124,06 € 2 124,06 €
Fridge 2 091,00 € 7 14,29% 298,59 € 298,59 € 298,59 € 298,59 € 298,59 € 298,59 € 298,59 € 341,65 € 341,65 € 341,65 € 341,65 € 341,65 €
Pipettes 5 000,00 € 7 14,29% 714,00 € 714,00 € 714,00 € 714,00 € 714,00 € 714,00 € 714,00 € 816,95 € 816,95 € 816,95 € 816,95 € 816,95 €
Freezer 2 460,00 € 7 14,29% 351,29 € 351,29 € 351,29 € 351,29 € 351,29 € 351,29 € 351,29 € 401,94 € 401,94 € 401,94 € 401,94 € 401,94 €
Sub-total 67 551,00 € 9 646,28 € 9 646,28 € 9 646,28 € 9 646,28 € 9 646,28 € 9 646,28 € 9 646,28 € 11 037,09 € 11 037,09 € 11 037,09 € 11 037,09 € 11 037,09 €
Administrative Equipment
Printing Machine 529,00 € 5 20% 105,80 € 105,80 € 105,80 € 105,80 € 105,80 € 116,35 € 116,35 € 116,35 € 116,35 € 125,94 € 125,94 € 125,94 €
Mobile Phone 1 (CEO) 146,26 € 5 20% 29,25 € 29,25 € 29,25 € 29,25 € 29,25 € 32,17 € 32,17 € 32,17 € 32,17 € 34,82 € 34,82 € 34,82 €
Mobile Phone 2 (Clinical Trials Specialist) 146,26 € 5 20% 29,72 € 29,72 € 29,72 € 29,72 € 29,72 € 32,81 € 32,81 € 32,81 € 32,81 € 35,52 € 35,52 €
Mobile Phone 3 (QCM) 146,26 € 5 20% 30,31 € 33,47 € 33,47 € 33,47 € 33,47 € 33,47 € 36,23 € 36,23 € 36,23 € 36,23 €
Mobile Phone 4 (Mkt Manager) 146,26 € 5 20% 32,81 € 32,81 € 32,81 € 32,81 € 32,81 € 36,23 €
Mobile Phone 5 (Sales Manager) 146,26 € 5 20% 33,47 € 33,47 € 33,47 € 33,47 € 33,47 €
Mobile Phone 6 (Sales Rep 1) 146,26 € 5 20% 33,47 € 33,47 € 33,47 € 33,47 € 33,47 €
Mobile Phone 7 (Sales Rep 2) 146,26 € 5 20% 33,47 € 33,47 € 33,47 € 33,47 € 33,47 €
Mobile Phone 8 (Sales Rep 3) 146,26 € 5 20% 33,47 € 33,47 € 33,47 € 33,47 € 33,47 €
Mobile Phone 9 (Sales Rep 4) 146,26 € 5 20% 34,14 € 34,14 € 34,14 € 34,14 €
Mobile Phone 10 (Sales Rep 5) 146,26 € 5 20% 34,14 € 34,14 € 34,14 € 34,14 €
Mobile Phone 11 (Sales Rep 6) 146,26 € 5 20% 34,82 € 34,82 € 34,82 €
Phone 1 23,97 € 5 20% 4,79 € 4,79 € 4,79 € 4,79 € 4,79 € 5,27 € 5,27 € 5,27 € 5,27 € 5,71 € 5,71 € 5,71 €
Phone 2 23,97 € 5 20% 4,87 € 4,87 € 4,87 € 4,87 € 4,87 € 5,38 € 5,38 € 5,38 € 5,38 € 5,82 € 5,82 €
Furniture 123,00 € 8 13% 15,38 € 15,38 € 15,38 € 15,38 € 15,38 € 15,38 € 15,38 € 15,38 € 17,94 € 17,94 € 17,94 € 17,94 €
Sub-total 2 308,80 € 155,22 € 189,81 € 220,13 € 223,28 € 223,28 € 237,23 € 273,64 € 407,52 € 481,13 € 528,63 € 531,78 € 535,19 €
TOTAL DEP. FIXED TANGIBLE ASSETS 169 859,80 € 16 051,50 € 22 436,09 € 22 466,41 € 22 469,56 € 22 958,23 € 23 495,63 € 30 542,96 € 39 218,78 € 39 847,86 € 40 461,96 € 41 043,03 € 41 635,93 €
INTAGIBLE ASSETS
R&D Expenses
Clinical Trials Phase IIB/III 8 000 000,00 € 20 5% 431 274,93 € 431 274,93 € 431 274,93 € 431 274,93 € 431 274,93 € 431 274,93 € 431 274,93 € 431 274,93 €
Sub-total 8 000 000,00 € - € - € - € - € 431 274,93 € 431 274,93 € 431 274,93 € 431 274,93 € 431 274,93 € 431 274,93 € 431 274,93 € 431 274,93 €
Industrial Property
Patent Acquisition 4 000 000,00 € 20 5% 310 896,00 € 310 896,00 € 310 896,00 € 310 896,00 € 310 896,00 € 310 896,00 € 310 896,00 € 310 896,00 € 310 896,00 € 310 896,00 €
Sub-total 4 000 000,00 € - € - € 310 896,00 € 310 896,00 € 310 896,00 € 310 896,00 € 310 896,00 € 310 896,00 € 310 896,00 € 310 896,00 € 310 896,00 € 310 896,00 €
TOTAL DEP. INTANGIBLE ASSETS 12 000 000,00 € - € - € 310 896,00 € 310 896,00 € 742 170,93 € 742 170,93 € 742 170,93 € 742 170,93 € 742 170,93 € 742 170,93 € 742 170,93 € 742 170,93 €
TOTAL DEP. ASSETS 12 169 859,80 € 16 051,50 € 22 436,09 € 333 362,41 € 333 365,56 € 765 129,17 € 765 666,56 € 772 713,89 € 781 389,71 € 782 018,80 € 782 632,89 € 783 213,96 € 783 806,86 €
AMORTIZATIONS AND DEPRECIATIONS OF FIXED CAPITAL - REINVESTMENTS MADE AFTER THE LAST YEAR AMORTIZATION - CURRENT PRICES
Table 43 - Depreciations of fixed assets, Commercialization